August, 2005 HSBC Finance Corporation Supplement to the Form 10-Q for the period ended June 30, 2005

International Financial Reporting Standards ("IFRS") Prior to January 1, 2005, HSBC Holdings plc ("HSBC") reported results on a U.K. GAAP basis. The European Union has determined that all European listed companies will be required to prepare their consolidated financial statements using IFRS by 2005. As a result, HSBC began reporting its financial results under IFRS rather than U.K. GAAP with its release of interim financial results for the six months ended June 30, 2005. Managed Basis (a non-GAAP financial measure) assumes that securitized receivables have not been sold and remain on our balance sheet. Management Basis In addition to managed basis reporting, we also monitor our operations and evaluate trends on a Management basis (a non-GAAP financial measure). Management basis reporting, in addition to the managed basis adjustments, assumes that the Mortgages and Private Label receivables transferred to HSBC's U.S. banking subsidiary, HSBC Bank USA, N.A. ("HSBC Bank USA"), have not been sold and remain on the balance sheet, and that the funding facility with HSBC Bank USA as the originating lender for our taxpayer refund anticipation loan program is not in place. We also monitor our operations and evaluate trends on a management basis because the receivable sales to HSBC Bank USA were conducted primarily to more appropriately fund prime receivables within the HSBC Group and such receivables continue to be managed and serviced by us without regard to ownership. Furthermore, we Basis of Reporting

Management Basis- continued also review operating results and make decisions about allocating resources such as employees on a management basis. When reporting on a management basis, net interest margin, fee income and the provision for credit losses is adjusted to include the activity associated with these receivables transferred to HSBC Bank, USA. Gains on sales and the related servicing fees are eliminated along with the funding facility fees paid to HSBC Bank, USA. We believe that management basis information enables readers, investors and other interested parties to better understand the overall performance and related trends of our consumer finance business. IFRS Management Basis (a non-GAAP financial measure) represents Management Basis plus IFRS adjustments. International Accounting Standards ("IAS") Lite Management Basis excludes application of: IAS 32, "Financial Instruments: Disclosure and Presentation;" IAS 39, "Financial Instruments: Recognition and Measurement;" and IFRS 4, "Insurance Contracts." Basis of Reporting - continued

June 30, 2005 Highlights - IFRS Management Basis Net Income growth - 7% H1 05 over H1 04 Strong receivables growth June 05 over June 04 of 17% Real Estate Secured growth of 26% Auto Finance growth of 16% Cards growth of 10% Personal non-credit card growth of 9% Expenses H1 05 compared to H2 04 and H1 04: Efficiency ratio of 36.1%, down 188 bps from H2 04, up 170 bps from H1 04 Expenses to receivables are 3.6%, down 37 bps from H2 04 and down 33 bps from H1 04

June 30, 2005 Highlights - Management Basis NIM compression consistent with the current market environment Yield has stabilized against first half of last year NIM stable Q2 05 compared to Q1 05 RAR (Risk Adjusted Revenue) is essentially flat due to the offsetting affects of NIM compression and credit quality improvements and increased fee generation Improvements in collections & underwriting Improved credit results quarter-over-prior year quarter driven by stronger analytics, improved collections, mix and a favorable economy Charge-offs down 117 bps 2+ delinquencies down 95 bps (U.S. GAAP)

Net Interest Income Other Revenues Total Revenues Provision for Loan Losses Operating Expenses Pre-tax Income Taxes Net Income - Management Basis Efficiency Ratio HSBC Finance Corporation IFRS Management Basis (A Non-GAAP Measure) (Millions $) IFRS H1 05 (1) Excluding impact of FFIEC implementation, H2 04 net income was $1,068 million. $5,834 1,434 7,268 2,321 2,627 2,320 776 $1,544 36.1% $5,613 1,378 6,991 2,848 2,658 1,485 515 $970 38.0% $5,642 1,410 7,052 2,497 2,429 2,126 690 $1,436 34.4% IAS Lite H2 04 IAS Lite H1 04 (1)

Key Ratios - Management Basis Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 NIM 0.0816 0.0775 0.0757 0.0713 0.071 RAR 0.066 0.064 0.0652 0.0671 0.0651 ROMA 0.0106 0.0084 0.0074 0.0132 0.0114 Risk Adjusted Margin 4.07 4.6 4.35 4.34 4.03 (1) Excludes impact of initial FFIEC implementation. (2) Excludes mark-to-market on derivatives which do not quality as effective hedges and ineffectiveness associated with qualifying hedges under FAS 133. (1) (2) (2) (U.S. GAAP)

Credit Quality - Management Basis Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Charge-Offs 0.0442 0.0423 0.0384 0.0356 0.0325 RAR 0.066 0.064 0.0652 0.0671 0.0651 2+ Delinquency 0.0454 0.0444 0.0395 0.0368 0.0359 Risk Adjusted Margin 4.07 4.6 4.35 4.34 4.03 (1) Q4 04 excludes impact of initial FFIEC implementation. (2) Excludes mark-to-market on derivatives which do not quality as effective hedges and ineffectiveness associated with qualifying hedges under FAS 133. (1) (2) (U.S. GAAP)

Net Interest Income - Management Basis Interest Income Interest Expense Net Interest Income Q2 05 $4,004 1,344 $2,660 Q1 05 $3,902 1,299 $2,603 Q2 04 $3,486 856 $2,630 (Millions $) Net Interest Income Yield Cost of Funds NIM Q2 05 10.7% 3.6 7.1% Q1 05 10.7% 3.6 7.1% Q2 04 10.8% 2.6 8.2% Yield & Cost of Funds (U.S. GAAP)

HSBC Finance Corporation - IFRS Management Basis Receivables (Millions $) (1) MasterCard is a registered trademark of MasterCard International, Incorporated and Visa is a registered trademark of VISA USA, Inc.

Retail Branch Channel Continued record production of sub-prime mortgages new volume yields lower than portfolio yields due to mix shift to lower LTV Near prime mortgage production continues to grow 7% of managed loan account leverages fixed cost branch infrastructure led to some NIM compression given lower yields, but accretive to ROMA over time Mix shift is due to optimization of Risk and Return Correspondent/Wholesale Mortgage Channel $5.7 billion cumulative of "A-" (near prime) purchased by HSBC USA Inc. Accretive to NIM for HSBC USA Inc. and HSBC North America Holdings Inc. but dilutive to NIM and RAR for HSBC Finance Corporation on a management basis Leverages the HSBC Finance Corporation capability and HSBC USA Inc. cost of funds Purchase premium on wholesale loans is amortized through NIM Auto Current origination mix is 2% prime, 88% near prime and 10% sub-prime Near prime is the most profitable segment on a ROMA basis Benefit of this mix shift is evident in the early credit performance on those vintages Net charge-off improvement improved front-end underwriting lower severities due to stronger used vehicle auction prices

Retail Branch Channel (HFC/Beneficial) Expand junior lien production production increased 27% over Q1 05 Increase unsecured loans through more frequent mailings and increased lines selectively Increase usage of risk-based pricing enhanced regional market pricing segmentation model More granular pricing for real estate secured product Continue deployment of proprietary analytics for pricing and risk management Key Actions to Affect NIM, RAR, Receivable Mix Wholesale Mortgage Channel Increase junior lien production production increased 50% over Q1 05 Diversify originations through higher return seller clients More granular pricing Enhance portfolio retention

Cards Continue focus on non-prime card sectors Focus on incremental fee opportunities, including fee-focused products Continue focus on risk-based pricing and line management "HSBC" branded prime portfolio delivered strong growth Key Actions to Affect NIM, RAR, Receivable Mix Auto Diversify channels of origination Increase direct-to-consumer channel Originate more stable and predictable near prime mix Optimize collections operation for maximum efficiency Active portfolio management and customer retention

APPENDIX

Reconciliations to GAAP Financial Measures

		Three Months Ended
		June 30, 2005			March 31, 2005			June 30, 2004
		(Dollars are in millions)
Return on Average Assets:
Net income:
	Owned basis	$	472		$	626		$	433
	Management basis adjustments		38			80			24
	Management basis	$	510		$	706		$	457
Adjusted net income:
	Owned basis	$	472		$	626		$	433
	Management basis adjustments		38			80			24
	Derivative adjustments		(48	)		(166	)		(79	)
	Management basis adjusted for derivatives	$	462		$	540		$	378
Average assets:
	Owned basis	$	134,834		$	131,954		$	117,467
	Management basis adjustments		30,479			34,862			27,736
	Management basis	$	165,313		$	166,816		$	145,203
Return on average owned assets			1.40	%		1.90	%		1.47	%
Return on average management assets			1.23			1.69			1.26
Return on average management assets, adjusted for derivatives			1.12			1.29			1.04
Net Interest Margin:
Net Interest Income:
	Owned basis	$	2,035		$	1,888		$	1,930
	Management basis adjustments		625			715			700
	Management basis	$	2,660		$	2,603		$	2,630
Average interest-earning assets:
	Owned basis	$	119,523		$	112,985		$	101,238
	Management basis adjustments		30,366			33,109			27,718
	Management basis	$	149,889		$	146,094		$	128,956
Owned basis net interest margin			6.81	%		6.68	%		7.63	%
Management basis net interest margin			7.10			7.13			8.16

Reconciliations to GAAP Financial Measures

		Three Months Ended
		June 30, 2005			March 31, 2005			June 30, 2004
		(Dollars are in millions)
Managed Basis Risk Adjusted Revenue:
Net interest income		$	2,284		$	2,220		$	2,582
Other revenues, excluding securitization revenue and derivative income			1,068			1,208			860
Less: Net charge-offs			(1,028	)		(1,118	)		(1,367	)
Risk adjusted revenue		$	2,324		$	2,310		$	2,075
Management basis adjustments:
Net interest income		$	376		$	383		$	48
Other revenues, excluding securitization revenue and derivative income			(123	)		(104	)		(5	)
Less: Net charge-offs			(156	)		(154	)		(2	)
Risk adjusted revenue, management basis adjustments		$	97		$	125		$	41
Management basis:
Net interest income		$	2,660		$	2,603		$	2,630
Other revenues, excluding securitization revenue and derivative income			945			1,104			855
Less: Net charge-offs			(1,184	)		(1,272	)		(1,369	)
Risk adjusted revenue, management basis		$	2,421		$	2,435		$	2,116
Average interest-earning assets:
	Managed basis	$	129,726		$	125,869		$	124,806
	Management basis adjustments		20,163			20,225			4,150
	Management basis	$	149,889		$	146,094		$	128,956
Managed basis risk adjusted revenue			7.17	%		7.34	%		6.65	%
Management basis risk adjusted revenue			6.46			6.67			6.56

Reconciliations to GAAP Financial Measures

		Three Months Ended
		June 30, 2005			March 31, 2005			June 30, 2004
		(Dollars are in millions)
Consumer Net Charge-off Ratio:
Consumer net charge-offs:
	Owned basis	$	844		$	856		$	966
	Management basis adjustments		340			410			403
	Management basis	$	1,184		$	1,266		$	1,369
Average consumer receivables:
	Owned basis	$	115,354		$	108,928		$	96,189
	Management basis adjustments		30,359			33,379			27,728
	Management basis	$	145,713		$	142,307		$	123,917
Owned basis consumer net charge-off ratio			2.93	%		3.15	%		4.02	%
Management basis consumer net charge-off ratio			3.25			3.56			4.42
Two-Months-and-Over Contractual Delinquency Ratio:
Consumer 2+ delinquency:
	Owned basis	$	4,419		$	4,229		$	4,534
	Management basis adjustments		887			1,044			1,208
	Management basis	$	5,306		$	5,273		$	5,742
Consumer receivables:
	Owned basis	$	118,532		$	111,911		$	99,115
	Management basis adjustments		29,187			31,480			27,380
	Management basis	$	147,719		$	143,391		$	126,495
Owned basis consumer 2+ delinquency ratio			3.73	%		3.78	%		4.57	%
Management basis consumer 2+ delinquency ratio			3.59			3.68			4.54

Reconciliation to GAAP Financial Measures

Net Interest Income

	Three Months Ended 6/30/05									Three Months Ended 3/31/05									Three Months Ended 6/30/04
				Management									Management									Management
	Owned			Basis			Management			Owned			Basis			Management			Owned			Basis			Management
($ millions)	Basis			Adjustments			Basis			Basis			Adjustments			Basis			Basis			Adjustments			Basis
Finance and other interest income	$	3,139		$	865		$	4,004		$	2,950		$	952		$	3,902		$	2,637		$	849		$	3,486
Interest expense		1,104			240			1,344			1,062			237			1,299			707			149			856
Net interest income		2,035			625			2,660			1,888			715			2,603			1,930			700			2,630
Average interest- earning assets	$	119,523		$	30,366		$	149,889		$	112,985		$	33,109		$	146,094		$	101,238		$	27,718		$	128,956
Yield		10.5	%		11.4	%		10.7	%		10.4	%		11.5	%		10.7	%		10.4	%		12.3	%		10.8	%
Cost of funds		3.7			3.2			3.6			3.7			2.9			3.6			2.8			2.2			2.6
Net interest margin		6.8	%		8.2	%		7.1	%		6.7	%		8.6	%		7.1	%		7.6	%		10.1	%		8.2	%

Reconciliation to GAAP Financial Measures

Receivables

		As at June 30, 2005							As at December 31, 2004							As at June 30, 2004
				IFRS							IFRS							IFRS
				Management			IFRS				Management			IFRS				Management			IFRS
		Owned		Basis			Management		Owned		Basis			Management		Owned		Basis			Management
		Basis		Adjustments			Basis		Basis		Adjustments			Basis		Basis		Adjustments			Basis
		($ millions)
Branch real estate		$	39,091	$	(10	)	$	39,081	$	36,117	$	94		$	36,211	$	32,409	$	445		$	32,854
Correspondent real estate			32,839		5,210			38,049		28,703		5,101			33,804		23,624		4,545			28,169
	Real estate secured		71,930		5,200			77,130		64,820		5,195			70,015		56,033		4,990			61,023
MasterCard/ Visa (1)			17,421		4,771			22,192		14,635		7,590			22,225		10,816		9,355			20,171
Private label			2,905		15,109			18,014		3,411		15,570			18,981		12,759		4,774			17,533
Auto finance			8,997		1,841			10,838		7,544		2,693			10,237		5,459		3,916			9,375
Personal non-credit card			17,255		2,501			19,756		16,128		3,513			19,641		14,019		4,126			18,145
Commercial and other			253		(181	)		72		317		(190	)		127		346		(194	)		152
Total receivables		$	118,761	$	29,241		$	148,002	$	106,855	$	34,371		$	141,226	$	99,432	$	26,967		$	126,399

(1)  MasterCard is a registered trademark of MasterCard International, Incorporated and Visa is a registered trademark of VISA USA, Inc.

Reconciliation to GAAP Financial Measures

Income Statement

IFRS Management Basis

		Six Months Ended 6/30/05									Six Months Ended 12/31/04									Six Months Ended 6/30/04
					IFRS									IFRS									IFRS
					Management			IFRS						Management			IFRS						Management			IFRS
		Owned			Basis			Management			Owned			Basis			Management			Owned			Basis			Management
		Basis			Adjustments			Basis			Basis			Adjustments			Basis			Basis			Adjustments			Basis
		($ millions)
Net interest income			3,923			1,911			5,834			4,052			1,561			5,613			3,750			1,892			5,642
Other revenues			2,586			(1,152	)		1,434			2,798			(1,420	)		1,378			2,275			(865	)		1,410
Total revenues			6,509			759			7,268			6,850			141			6,991			6,025			1,027			7,052
Provision for loan losses			1,872			449			2,321			2,409			439			2,848			1,925			573			2,498
Operating expenses			2,984			(357	)		2,627			2,870			(212	)		2,658			2,731			(303	)		2,428
Pre-tax income			1,653			667			2,320			1,571			(86	)		1,485			1,369			757			2,126
Taxes			555			221			776			534			(19	)		515			466			223			689
Net income			1,098			446			1,544			1,037			(67	)		970			903			534			1,437
Efficiency Ratio:
	Total costs and expenses		2,984			(357	)		2,627			2,870			(212	)		2,658			2,731			(303	)		2,428
	Policyholders’ benefits		(238	)		238			—			(206	)		206			—			(206	)		206			—
	Total costs and expenses, excluding policyholders’ benefits		2,746			(119	)		2,627			2,664			(6	)		2,658			2,525			(97	)		2,428
	Net interest income and other revenues		6,509			759			7,268			6,850			141			6,991			6,025			1,027			7,052
	Policyholders’ benefits		(238	)		238			—			(206	)		206			—			(206	)		206			—
	Net interest income and other revenues, excluding policyholders’ benefits		6,271			997			7,268			6,644			347			6,991			5,819			1,233			7,052
	Efficiency ratio		43.8	%		—			36.1	%		40.1	%		—			38.0	%		43.4	%		—			34.4	%
Net Income Growth:
	Net income	$	1,098		$	446		$	1,544		$	1,037		$	(67	)	$	970		$	903		$	534		$	1,437
	IFRS management basis net income growth H1 05 compared to H1 04								7	%								—									—