8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report: May 14, 2007

____________________________

Commission file number 1-8198

HSBC Finance Corporation

(Exact name of registrant as specified in its charter)

Delaware	86-1052062
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
2700 Sanders Road, Prospect Heights, Illinois	60070
(Address of principal executive offices)	(Zip Code)
(847) 564-5000 Registrant’s telephone number, including area code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Solicitation material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 40.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01. Regulation FD Disclosure.

This Form 8-K contains slides in Exhibit 99 to be used in a webcast presentation pertaining to the financial results of HSBC Finance Corporation for the three months ended March 31, 2007. The webcast will occur on May 15, 2007 at 9:00 a.m. (Eastern) and may be accessed at (877) 818-6787 in the United States, 0800.018-0795 in the United Kingdom and (800) 964-136 in Hong Kong. Replays of the call will be available from 11:00 a.m. (Eastern) on May 15 until 11:00 a.m. (Eastern) on May 22, 2007 and may be accessed by dialing (877) 818-6787 in the United States, 0800 376-9055 in the United Kingdom and (852) 2802-5151 in Hong Kong, with the passcode of 723370.

The information included in the slides with respect to HSBC Finance Corporation is presented on an International Financial Reporting Standards (“IFRSs”) Management Basis. IFRS is comprised of accounting standards issued by the International Accounting Standards Board and its predecessor body and interpretations issued by the International Financial Reporting Interpretations Committee and its predecessor body. IFRS Management Basis results are IFRS results that assumes that mortgage and private label receivables transferred to HSBC Bank USA, N.A., an affiliate of HSBC Finance Corporation have not been sold and remain on the HSBC Finance Corporation balance sheet.

HSBC Finance Corporation has filed its Quarterly Report on Form 10-Q for the period ended March 31, 2007 contemporaneously with this Form 8-K. The Form 10-Q is prepared on a U.S. GAAP basis with segment results prepared on an IFRS Management Basis

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

Not applicable.

(b) Pro Forma Financial Information.

Not applicable.

(c) Shell Company Transactions.

Not applicable.

(d) Exhibits

Exhibit No.	Description
99	HSBC Finance Corporation IFRS Management Basis 1Q 2007 results.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HSBC FINANCE CORPORATION (Registrant)
By:	/s/ Patrick D. Schwartz
Name: Title:	Patrick D. Schwartz Vice President and Deputy General Counsel – Corporate

Dated: May 14, 2007

EXHIBIT INDEX

Exhibit No.	Description
99	HSBC Finance Corporation IFRS Management Basis 1Q 2007 results.

3

EX-99

Q1 2007 Results
HSBC Finance Corporation
IFRS Management Basis

HSBC Holdings plc

Disclosure Statement

This presentation, including the accompanying slides and subsequent discussion, contains certain forward-looking
information with respect to the financial condition, results of operations and business of HSBC Holdings plc and HSBC
Finance Corporation. This information represents expectations or beliefs concerning future events and is subject to
unknown risks and uncertainties. This information speaks only as of the date on which it is provided. Additional detailed
information concerning important factors that could cause actual results to differ materially is available in the HSBC
Holdings plc Annual Report, and the HSBC Finance Corporation Annual Report on Form 10-K, each for the year ended
31 December 2006. Please further be advised that Regulation FD prohibits HSBC representatives from answering certain,
specific questions during the Q&A session. You may get copies of the HSBC Finance Corporation document referred to
above free by visiting EDGAR on the SEC Web site at www.sec.gov.

These materials do not constitute an offer to sell, or the solicitation of an offer to buy, any security of HSBC Finance
Corporation or any other issuer.

HSBC Holdings plc reports financial results in accordance with International Financial Reporting Standards (“IFRSs”).
IFRSs comprise accounting standards issued by the International Accounting Standards Board and its predecessor body
and interpretations issued by the International Financial Reporting Interpretations Committee and its predecessor body.

All amounts, unless otherwise stated, represents IFRS management basis of accounting.

IFRS Management Basis assumes that the mortgages and private label customer loans transferred to HSBC’s US banking
subsidiary, HSBC Bank USA, N.A. (“HSBC Bank USA”), have not been sold and remain on our balance sheet.
Such customer loans continue to be managed and serviced by HSBC Finance Corporation without regard to ownership.

2

HSBC Finance Corporation – Financial Results

Note: The figures above are presented on an International Financial Reporting Standards (“IFRS”) Management basis. See Note 11 “Business
segments” of Form 10-Q for the period ended 31 March 2007, for a reconciliation of IFRS to US GAAP

vs Q4 06

vs Q1 06

Q1 2007

Q4 2006

Q1  2006

21bps

14bps

35.4%

37.5%

36.8%

Cost efficiency ratio

(1%)

(6%)

(1,525)

(1,515)

(1,436)

Total operating expenses

231%

(42%)

900

(688)

1,558

Profit before tax

(1%)

7%

179,930

182,520

168,522

Customer Loans & Advances
(as at period end)

193%

(19%)

2,425

827

2,994

Net operating income

41%

(109%)

(1,888)

(3,208)

(904)

Loan impairment and      
other charges

7%

11%

$4,313

$4,035

$3,898

Net operating income before
loan impairment charges

% Change

US$ M

3

Notwithstanding modest balance sheet contraction, Q107 net operating income before
loan impairment charges was steady compared to Q406.

Net operating income before loan impairment charges increased 11% over Q106 primarily driven by 7% loan growth

Loan impairment charges excluding Mortgage Services, for Q107 compared to Q106
increased as a result of the following:

Unusually favorable credit environment, extremely low bankruptcies and strong economic
      conditions in Q106

Growth and seasoning of portfolios

Q107 credit performance in Mortgage Services was in line with expectations and reflects
a deceleration in rate of growth in delinquencies. Actions including the tightening of
credit policy, the discontinuance of Correspondent Channel origination and increased
collection capacity resulted in reduced Mortgage Services loan balances.

Operating expenses increased 6% compared to Q106 primarily to support loan growth
including higher marketing expenses, investment in co-brand card initiatives and
increased collection activities. Operating expenses were flat compared to Q406.

Credit Card, Retail Branch and Auto businesses performed well and in line with  
expectations.

HSBC Finance Corporation – Financial Results (continued)

Q107 Highlights

4

Strategic repositioning of the Mortgage Services business

Discontinuation of Correspondent Channel production in Mortgage Services

Centralization of management of mortgage related business

Strengthened structure with Chief Operating Officer role extended to cover credit      
risk organisation

Discontinuation of pre-season and pre-file tax products by Taxpayer Financial Services

Result of on-going review to ensure all products and services offered align with our brand
    promise, focused on offering consumers the most value-added products

Non-binding agreement to sell UK Insurance operations

Result of continuing evaluation and focus on strategic positioning of core businesses

HSBC Finance Corporation

Recent Strategic Initiatives

5

HSBC Finance Corporation

US$bn

Total

Excluding Mortgage

Services

Mortgage Services

Q106 benefited from unusually favorable credit environment and economic conditions

Profit before tax excluding Mortgage Services increased over Q406 primarily driven by
strong results in Credit Card business, Retail Branch businessand seasonal Taxpayer
Financial Services business

Lower profit before tax excluding Mortgage Services compared to Q106 primarily
resulting from higher loan impairment charges as credit environment trends towards
more normalised levels

Profit Before Tax

6

HSBC Finance CorporationLoan Impairment Charges

Total

Excluding Mortgage Services

Mortgage Services

Excluding Mortgage Services, loan impairment charges were above Q106 but slightly better compared with Q406

Q106 significantly benefited from a strong economy, benign credit environment and low bankruptcies

US$bn

7

Total

Excluding Mortgage Services

Mortgage Services

Delinquency excluding Mortgage Services was stable to previous quarter

Mortgage Services delinquency ratio increased primarily driven by expected seasoning of portfolio with
declining balances

HSBC Finance Corporation
2+ Delinquency Ratio

(%)

Note: See “Credit Quality” in MD&A of Form 10-Q for the period ended 31 March 2007 for delinquency information reported on a U.S. GAAP basis

8

HSBC Finance Corporation
Real Estate Secured  2+ Delinquency

(%)

Actions taken in Mortgage Services have positively impacted rate of growth in delinquencies and results are in line
with expectations

Continued stable performance of Branch Real Estate Secured portfolio

2+ Mortgage Services 1st Lien

2+ Branch Real Estate Secured

2+ Mortgage Services 2nd Lien

9

HSBC Finance Corporation
Customer Loans & Advances

163.8

168.5

174.3

177.5

182.5

179.9

Strategic reduction in Mortgage Services loan portfolio offset by steady to increasing growth in all other                  
HSBC Finance businesses

In March 2007, we announced our decision to discontinue Correspondent Channel acquisitions

Growth considering seasonality, in other businesses reflects the strength of the diversified finance business

US$bn

Mortgage Services

Branch Real Estate Secured

Credit Cards

Private Label Cards

Motor Vehicle Finance

Other

10

Mortgage Services
Loans by vintage and type

US$21.6bn

US$15.8bn

US$2.6bn

US$6.6bn

=  US$46.6bn

US$24.1bn

US$15.3bn

US$3.0bn

US$7.1bn

=  US$49.5bn

March 2007

December 2006

7%

14%

42%

37%

12%

40%

40%

1%

7%

5%

4%

41%

50%

10%

3%

38%

48%

1%

7%

4%

33%

56%

4%

32%

57%

7%

Pre 2004

2004

2005

2006

2007

(%)

100

80

60

40

20

0

100

80

60

40

20

18%

27%

24%

31%

20%

20%

21%

33%

6%

2nd Lien ARM

2nd Lien Fixed

1st Lien ARM

1st Lien Fixed

11

Mortgage Services Loans – Vintages

46.6

 49.5

5.0

5.0

Pre 2004

6.2

7.8

2004

15.4

17.8

2005

18.8

18.9

2006

1.2

2007

March 2007

December 2006

Vintages US$bn

US$bn

Substantial paydown of 2005 vintages has occurred during the quarter and reflects
actions taken within the Correspondent Channel

12

HSBC Finance Corporation

US economic conditions, particularly unemployment levels, bankruptcy filings, housing
market and interest rates

Impact of adjustable rate mortgage resets

Seasoning of loan balances, including Credit Card vintages originated in Q406

Ongoing Areas of Focus

13