8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report: July 31, 2006

Commission file number 1-8198

HSBC FINANCE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	86-1052062
(State of incorporation)	(IRS Employer Identification Number)
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  Soliciting 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 240.14d-2(b))

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

Item 2.02. Results of Operations and Financial Condition

      Financial supplement pertaining to the financial results of HSBC Finance Corporation for the quarter and six months ended June 30, 2006. The information included in the financial supplement is presented on a managed basis, which is a non-GAAP financial measure that assumes that securitized receivables have not been sold and remain on our balance sheet.

      This information shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act except as otherwise expressly stated in such a filing.

Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits

(a)	Financial statements of businesses acquired.
	Not applicable.
(b)	Pro forma financial information.
	Not applicable.
(c)	Exhibits.

No.		Exhibit
	99	Quarterly Financial Supplement for the quarter ended June 30, 2006

Signature

      Pursuant to the requirement 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

Patrick D. Schwartz

Vice President and Deputy General

Counsel-Corporate

Dated: July 31, 2006

EX-99

EXHIBIT 99

HSBC Finance Corporation

Quarterly Financial Supplement — June 30, 2006

Index			Page No.
Basis of Reporting				2
Consolidated Statements of Income — Owned Basis:
	Three Months			3
	Six Months			4
Receivables Analysis				5
Financial Highlights — Managed Basis:
	Three Months			6
	Six Months			7
Credit Quality/ Credit Loss Reserves — Managed Basis				8
Reconciliations to GAAP Financial Measures:
	Revenues, Average Interest-Earning Assets and Net Interest Income:
		Three Months		9
		Six Months		10
	Selected Financial Ratios			11
	Credit Quality/ Credit Loss Reserves:
		Two-Months-and-Over Contractual Delinquency		12
		Quarter-to-Date Charge-offs, Net of Recoveries		12
		Real Estate Charge-offs and REO Expense		14
		Credit Loss Reserves		15
		Nonperforming Assets		15

HSBC Finance Corporation

Basis of Reporting

Non-GAAP Financial Measures

      This Quarterly Financial Supplement includes financial information which is presented on a non-GAAP basis as discussed below. Information included in this Quarterly Financial Supplement is intended to supplement and should not be considered a substitute for owned basis reporting. This Quarterly Financial Supplement should be read in conjunction with the owned basis information reported in our Quarterly Report on Form 10-Q.

      See “Reconciliations to GAAP Financial Measures” for quantitative reconciliations of non-GAAP financial information to the equivalent owned basis GAAP financial information.

      Managed basis reporting We have historically monitored our operations and evaluated trends on a managed basis (a non-GAAP financial measure), which assumes that securitized receivables have not been sold and remain on our balance sheet. This is because the receivables that we securitize are subjected to underwriting standards comparable to our owned portfolio, are serviced by operating personnel without regard to ownership and result in a similar credit loss exposure for us. In addition, we fund our operations and make certain decisions about allocating resources such as capital on a managed basis.

      When reporting on a managed basis, net interest income, provision for credit losses and fee income related to receivables securitized are reclassified from securitization related revenue in our owned statement of income into the appropriate caption. Additionally, charge-off and delinquency associated with these receivables are included in our managed basis credit quality statistics.

      Debt analysts, rating agencies and fixed income investors have also historically evaluated our operations on a managed basis for the reasons discussed above and have historically requested managed basis information from us. We believe that managed basis information enables such investors and other interested parties to better understand the performance and quality of our entire loan portfolio and is important to understanding the quality of originations and the related credit risk inherent in our owned and securitized portfolios. As the level of our securitized receivables falls over time, managed basis and owned basis results will eventually converge.

2

HSBC Finance Corporation

CONSOLIDATED STATEMENTS OF INCOME — OWNED BASIS

Three Months

									% Change from
		Three Months Ended							Prior
		6/30/06			3/31/06		6/30/05		Qtr.			Year
		(dollars are in millions)
Finance and other interest income		$	4,311		$	4,087	$	3,139		5.5	%		37.3	%
Interest expense:
	HSBC affiliates		173			153		134		13.1			29.1
	Non-affiliates		1,589			1,470		970		8.1			63.8
Net interest income			2,549			2,464		2,035		3.4			25.3
Provision for credit losses			1,248			866		1,031		44.1			21.0
Net interest income after provision for credit losses			1,301			1,598		1,004		(18.6	)		29.6
Other revenues:
	Securitization related revenue		51			71		54		(28.2	)		(5.6	)
	Insurance revenue		226			273		278		(17.2	)		(18.7	)
	Investment income		34			34		33		—			3.0
	Derivative (expense) income		(7	)		57		76		(100+	)		(100+	)
	Fee income		442			392		354		12.8			24.9
	Taxpayer financial services revenue		20			234		18		(91.5	)		11.1
	Gain on receivable sales to HSBC affiliates		97			85		109		14.1			(11.0	)
	Servicing and other fees from HSBC affiliates		116			118		109		(1.7	)		6.4
	Other income		220			187		142		17.6			54.9
Total other revenues			1,199			1,451		1,173		(17.4	)		2.2
Costs and expenses:
	Salaries and employee benefits		564			581		526		(2.9	)		7.2
	Sales incentives		98			80		90		22.5			8.9
	Occupancy and equipment expenses		79			83		82		(4.8	)		(3.7	)
	Other marketing expenses		176			173		185		1.7			(4.9	)
	Other servicing and administrative expenses		246			283		192		(13.1	)		28.1
	Support services from HSBC affiliates		270			252		217		7.1			24.4
	Amortization of intangibles		63			80		83		(21.3	)		(24.1	)
	Policyholders’ benefits		107			118		116		(9.3	)		(7.8	)
Total costs and expenses			1,603			1,650		1,491		(2.8	)		7.5
Income before income tax expense			897			1,399		686		(35.9	)		30.8
Income tax expense			329			511		214		(35.6	)		53.7
Net income		$	568		$	888	$	472		(36.0	)%		20.3	%

Securitization Related Revenue

	Three Months Ended
	6/30/06		3/31/06		6/30/05
	(in millions)
Net initial gains(1)	$	—	$	—	$	—
Net replenishment gains(1)		4		15		44
Servicing revenue and excess spread		47		56		10
Total	$	51	$	71	$	54

⁽¹⁾  Net of our estimate of probable credit losses under the recourse provisions.

3

HSBC Finance Corporation

CONSOLIDATED STATEMENTS OF INCOME — OWNED BASIS

Six Months

		Six Months Ended
		6/30/06		6/30/05		% Change
		(dollars are in millions)
Finance and other interest income		$	8,398	$	6,089		37.9	%
Interest expense:
	HSBC affiliates		326		285		14.4
	Non-affiliates		3,059		1,881		62.6
Net interest income			5,013		3,923		27.8
Provision for credit losses			2,114		1,872		12.9
Net interest income after provision for credit losses			2,899		2,051		41.3
Other revenues:
	Securitization related revenue		122		139		(12.2	)
	Insurance revenue		499		535		(6.7	)
	Investment income		68		66		3.0
	Derivative income		50		336		(85.1	)
	Fee income		834		660		26.4
	Taxpayer financial services revenue		254		261		(2.7	)
	Gain on receivable sales to HSBC affiliates		182		209		(12.9	)
	Servicing and other fees from HSBC affiliates		234		220		6.4
	Other income		407		245		66.1
Total other revenues			2,650		2,671		(.8	)
Costs and expenses:
	Salaries and employee benefits		1,145		1,023		11.9
	Sales incentives		178		172		3.5
	Occupancy and equipment expenses		162		169		(4.1	)
	Other marketing expenses		349		365		(4.4	)
	Other servicing and administrative expenses		529		486		8.8
	Support services from HSBC affiliates		522		426		22.5
	Amortization of intangibles		143		190		(24.7	)
	Policyholders’ benefits		225		238		(5.5	)
Total costs and expenses			3,253		3,069		6.0
Income before income tax expense			2,296		1,653		38.9
Income tax expense			840		555		51.4
Net income		$	1,456	$	1,098		32.6	%

Securitization Related Revenue

	Six Months Ended
	6/30/06		6/30/05
	(in millions)
Net initial gains(1)	$	—	$	—
Net replenishment gains(1)		19		97
Servicing revenue and excess spread		103		42
Total	$	122	$	139

⁽¹⁾  Net of our estimate of probable credit losses under the recourse provisions.

4

HSBC Finance Corporation

RECEIVABLES ANALYSIS

End-of-Period Receivables

								% Change from
								Prior
		6/30/06		3/31/06		6/30/05		Qtr.			Year
				(dollars are in millions)
Owned receivables:
	Real estate secured	$	93,893	$	89,492	$	71,930		4.9	%		30.5	%
	Auto finance		11,723		11,186		8,997		4.8			30.3
	MasterCard/ Visa		24,959		23,449		17,421		6.4			43.3
	Private label		2,522		2,428		2,905		3.9			(13.2	)
	Personal non-credit card		20,664		20,006		17,255		3.3			19.8
	Commercial and other		198		206		253		(3.9	)		(21.7	)
Total owned receivables			153,959		146,767		118,761		4.9			29.6
Receivables serviced with limited recourse:
	Auto finance		693		920		1,819		(24.7	)		(61.9	)
	MasterCard/ Visa		750		1,528		4,752		(50.9	)		(84.2	)
	Personal non-credit card		468		661		2,409		(29.2	)		(80.6	)
Total receivables serviced with limited recourse			1,911		3,109		8,980		(38.5	)		(78.7	)
Managed receivables:(1)
	Real estate secured		93,893		89,492		71,930		4.9			30.5
	Auto finance		12,416		12,106		10,816		2.6			14.8
	MasterCard/ Visa		25,709		24,977		22,173		2.9			15.9
	Private label		2,522		2,428		2,905		3.9			(13.2	)
	Personal non-credit card(2)		21,132		20,667		19,664		2.2			7.5
	Commercial and other		198		206		253		(3.9	)		(21.7	)
Total managed receivables		$	155,870	$	149,876	$	127,741		4.0	%		22.0	%

(1)	Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information.
(2)	Personal non-credit card receivables are comprised of the following:

	6/30/06		3/31/06		6/30/05
	(in millions)
Domestic personal unsecured	$	12,943	$	12,476	$	10,942
Union Plus personal unsecured		267		298		387
Personal homeowner loans		4,334		4,370		4,395
Foreign unsecured		3,588		3,523		3,940
Total	$	21,132	$	20,667	$	19,664

5

HSBC Finance Corporation

FINANCIAL HIGHLIGHTS — MANAGED BASIS⁽¹⁾

Revenues, Average Interest-Earning Assets and Net Interest Income

Three Months

																			% Change from
	Three Months Ended																		Prior
	6/30/06			(2)			3/31/06			(2)			6/30/05			(2)			Qtr.			Year
										(dollars are in millions)
Finance and other interest income	$	4,413			11.34	%	$	4,231			11.22	%	$	3,488			10.75	%		4.3	%		26.5	%
Interest expense		1,797			4.62			1,664			4.41			1,204			3.71			8.0			49.3
Net interest income		2,616			6.72	%		2,567			6.81	%		2,284			7.04	%		1.9			14.5
Provision for credit losses		1,219						874						1,083						39.5			12.6
Net interest income after provision for credit losses	$	1,397					$	1,693					$	1,201						(17.5	)%		16.3	%
Other revenues:
Insurance revenue	$	226					$	273					$	278						(17.2	)%		(18.7	)%
Investment income		34						34						33						—			3.0
Fee income		468						422						428						10.9			9.3
Securitization related revenue		(71	)					(54	)					(217	)					31.5			(67.3	)
Derivative (expense) income		(7	)					57						76						(100+	)		(100+	)
Taxpayer financial services revenue		20						234						18						(91.5	)		11.1
Gain on receivable sales to HSBC affiliates		97						85						109						14.1			(11.0	)
Servicing and other fees from HSBC affiliates		116						118						109						(1.7	)		6.4
Other income		220						187						142						17.6			54.9
Total other revenues	$	1,103					$	1,356					$	976						(18.7	)%		13.0	%
Average managed receivables
Real estate secured	$	91,347					$	86,664					$	70,217						5.4	%		30.1	%
Auto finance		12,222						12,009						10,504						1.8			16.4
MasterCard/ Visa		25,476						25,476						22,066						—			15.5
Private label		2,510						2,504						3,017						.2			(16.8	)
Personal non-credit card		20,979						20,725						19,729						1.2			6.3
Commercial and other		202						207						261						(2.4	)		(22.6	)
Purchase accounting fair value adjustments		14						45						153						(68.9	)		(90.8	)
Average managed receivables	$	152,750					$	147,630					$	125,947						3.5	%		21.3	%
Average noninsurance investments		2,189						2,447						3,106						(10.5	)		(29.5	)
Other interest-earning assets		702						694						673						1.2			4.3
Average managed interest-earning assets	$	155,641					$	150,771					$	129,726						3.2	%		20.0	%
Selected Financial Ratios:
Return on average managed assets		1.34	%					2.14	%					1.30	%					(37.4	)%		3.1	%
Efficiency ratio		41.42						40.26						43.73						(2.9	)		5.3
Net interest margin		6.72						6.81						7.04						(1.3	)		(4.5	)
Risk adjusted revenue		6.88						7.78						7.37						(11.6	)		(6.6	)

(1)	Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.
(2)	% Columns: comparison to average managed interest-earning assets, annualized

6

HSBC Finance Corporation

FINANCIAL HIGHLIGHTS — MANAGED BASIS⁽¹⁾

Revenues, Average Interest-Earning Assets and Net Interest Income

Six Months

	Six Months Ended
	6/30/06			(2)			6/30/05			(2)			% Change
	(dollars are in millions)
Finance and other interest income	$	8,644			11.28	%	$	6,879			10.77	%		25.7	%
Interest expense		3,461			4.51			2,375			3.72			45.7
Net interest income		5,183			6.77	%		4,504			7.05	%		15.1
Provision for credit losses		2,093						1,954						7.1
Net interest income after provision for credit losses	$	3,090					$	2,550						21.2	%
Other revenues:
Insurance revenue	$	499					$	535						(6.7	)%
Investment income		68						66						3.0
Fee income		890						825						7.9
Securitization related revenue		(125	)					(525	)					(76.2	)
Derivative income		50						336						(85.1	)
Taxpayer financial services revenue		254						261						(2.7	)
Gain on receivable sales to HSBC affiliates		182						209						(12.9	)
Servicing and other fees from HSBC affiliates		234						220						6.4
Other income		407						245						66.1
Total other revenues	$	2,459					$	2,172						13.2	%
Average managed receivables
Real estate secured	$	89,005					$	68,390						30.1	%
Auto finance		12,116						10,373						16.8
MasterCard/ Visa		25,476						21,997						15.8
Private label		2,507						3,122						(19.7	)
Personal non-credit card		20,852						19,778						5.4
Commercial and other		204						283						(27.9	)
Purchase accounting fair value adjustments		30						169						(82.2	)
Average managed receivables	$	150,190					$	124,112						21.0	%
Average noninsurance investments		2,318						3,016						(23.1	)
Other interest-earning assets		698						669						4.3
Average managed interest-earning assets	$	153,206					$	127,797						19.9	%
Selected Financial Ratios:
Return on average managed assets		1.73	%					1.52	%					13.8	%
Efficiency ratio		40.83						43.97						7.1
Net interest margin		6.77						7.05						(4.0	)
Risk adjusted revenue		7.33						7.44						(1.5	)

(1)	Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.
(2)	% Columns: comparison to average managed interest-earning assets, annualized.

7

HSBC Finance Corporation

CREDIT QUALITY/ CREDIT LOSS RESERVES — MANAGED BASIS⁽¹⁾

Two-Months-and-Over Contractual Delinquency

As a percent of managed consumer receivables, excludes commercial.	6/30/06			3/31/06			6/30/05
Real estate secured		2.52	%		2.46	%		2.56	%
Auto finance		2.43			1.85			2.69
MasterCard/ Visa		4.10			4.22			3.77
Private label		5.42			5.50			4.91
Personal non-credit card		9.00			8.97			9.11
Total		3.70	%		3.65	%		3.85	%

Quarter-to-Date Charge-offs, Net of Recoveries

As a percent of average managed consumer receivables, annualized, excludes commercial.	6/30/06			3/31/06			6/30/05
Real estate secured		.97	%		.75	%		.78	%
Auto finance		2.73			4.27			3.68
MasterCard/ Visa		5.73			3.92			6.49
Private label		5.29			5.62			4.36
Personal non-credit card		7.97			7.98			8.17
Total		2.94	%		2.69	%		3.28	%
Real estate charge-offs and REO expense as a percent of average managed real estate secured receivables		1.04	%		.89	%		.84	%

Credit Loss Reserves

	6/30/06			3/31/06			6/30/05
	(in millions)
Reserves for managed receivables at beginning of quarter	$	4,629		$	4,736		$	4,242
Provision for credit losses		1,219			874			1,083
Charge-offs		(1,282	)		(1,125	)		(1,162	)
Recoveries		161			135			134
Other, net		13			9			(16	)
Reserves for managed receivables at end of quarter	$	4,740		$	4,629		$	4,281
Reserves as a percent of managed receivables		3.04	%		3.09	%		3.35	%

Nonperforming Assets

	6/30/06			3/31/06			6/30/05
	(in millions)
Nonaccrual managed receivables	$	3,675		$	3,628		$	3,348
Accruing managed receivables 90 or more days delinquent		770			763			537
Renegotiated commercial loans		1			1			1
Total nonperforming managed receivables		4,446			4,392			3,886
Real estate owned		620			563			459
Total nonperforming assets	$	5,066		$	4,955		$	4,345
Managed credit loss reserves as a percent of nonperforming managed receivables		106.6	%		105.4	%		110.2	%

⁽¹⁾  Managed basis reporting is a non-GAAP financial measure. See “Basis of Reporting” for a discussion on the use of non-GAAP financial information and “Reconciliations to GAAP Financial Measures” for quantitative reconciliations to the equivalent GAAP basis financial measure.

8

HSBC Finance Corporation

RECONCILIATION TO GAAP FINANCIAL MEASURES

Revenues, Average Interest-Earning Assets and Net Interest Income

Three Months

		Three Months Ended 6/30/06									Three Months Ended 3/31/06									Three Months Ended 6/30/05
					Serviced with									Serviced with									Serviced with
					Limited									Limited									Limited
		Owned			Recourse(1)			Managed			Owned			Recourse(1)			Managed			Owned			Recourse(1)			Managed
											(Dollars are in millions)
Finance and other interest income		$	4,311		$	102		$	4,413		$	4,087		$	144		$	4,231		$	3,139		$	349		$	3,488
Interest expense			1,762			35			1,797			1,623			41			1,664			1,104			100			1,204
Net interest income			2,549			67			2,616			2,464			103			2,567			2,035			249			2,284
Provision for credit losses			1,248			(29	)		1,219			866			8			874			1,031			52			1,083
Net interest income after provision for credit losses		$	1,301		$	96		$	1,397		$	1,598		$	95		$	1,693		$	1,004		$	197		$	1,201
Other revenues:
	Securitization related revenue	$	51		$	(122	)	$	(71	)	$	71		$	(125	)	$	(54	)	$	54		$	(271	)	$	(217	)
	Insurance revenue		226			—			226			273			—			273			278			—			278
	Investment income		34			—			34			34			—			34			33			—			33
	Fee income		442			26			468			392			30			422			354			74			428
	Derivative (expense) income		(7	)		—			(7	)		57			—			57			76			—			76
	Taxpayer financial services revenue		20			—			20			234			—			234			18			—			18
	Gain on receivable sales to HSBC affiliates		97			—			97			85			—			85			109			—			109
	Servicing and other fees from HSBC affiliates		116			—			116			118			—			118			109			—			109
	Other income		220			—			220			187			—			187			142			—			142
Total other revenues		$	1,199		$	(96	)	$	1,103		$	1,451		$	(95	)	$	1,356		$	1,173		$	(197	)	$	976
Average receivables:
	Real estate secured	$	91,347		$	—		$	91,347		$	86,664		$	—		$	86,664		$	70,205		$	12		$	70,217
	Auto finance		11,419			803			12,222			10,930			1,079			12,009			8,510			1,994			10,504
	MasterCard/ Visa		24,224			1,252			25,476			23,865			1,611			25,476			16,626			5,440			22,066
	Private label		2,510			—			2,510			2,504			—			2,504			3,017			—			3,017
	Personal non-credit card		20,414			565			20,979			19,910			815			20,725			16,972			2,757			19,729
	Commercial and other		202			—			202			207			—			207			261			—			261
	Purchase accounting fair value adjustments		14			—			14			45			—			45			153			—			153
Average receivables		$	150,130		$	2,620		$	152,750		$	144,125		$	3,505		$	147,630		$	115,744		$	10,203		$	125,947
Average noninsurance investments			2,189			—			2,189			2,447			—			2,447			3,106			—			3,106
Other interest-earning assets			702			—			702			694			—			694			673			—			673
Average interest-earning assets		$	153,021		$	2,620		$	155,641		$	147,266		$	3,505		$	150,771		$	119,523		$	10,203		$	129,726
Net interest income as a percentage of average interest-earning assets			6.66	%		10.23	%		6.72	%		6.69	%		11.75	%		6.81	%		6.81	%		9.76	%		7.04	%

⁽¹⁾  When reporting on a managed basis, finance and other interest income, interest expense, provision for credit losses and fee income related to securitized receivables are reclassified from securitization related revenue in our owned statements of income into the appropriate caption.

9

HSBC Finance Corporation

RECONCILIATION TO GAAP FINANCIAL MEASURES

Revenues, Average Interest-Earning Assets and Net Interest Income

Six Months

		Six Months Ended 6/30/06									Six Months Ended 6/30/05
					Serviced with									Serviced
					Limited									with Limited
		Owned			Recourse(1)			Managed			Owned			Recourse(1)			Managed
		(dollars are in millions)
Finance and other interest income		$	8,398		$	246		$	8,644		$	6,089		$	790		$	6,879
Interest expense			3,385			76			3,461			2,166			209			2,375
Net interest income			5,013			170			5,183			3,923			581			4,504
Provision for credit losses			2,114			(21	)		2,093			1,872			82			1,954
Net interest income after provision for credit losses		$	2,899		$	191		$	3,090		$	2,051		$	499		$	2,550
Other revenues:
	Securitization related revenue	$	122		$	(247	)	$	(125	)	$	139		$	(664	)	$	(525	)
	Insurance revenue		499			—			499			535			—			535
	Investment income		68			—			68			66			—			66
	Fee income		834			56			890			660			165			825
	Derivative income		50			—			50			336			—			336
	Taxpayer financial services revenue		254			—			254			261			—			261
	Gain on receivable sales to HSBC affiliates		182			—			182			209			—			209
	Servicing and other fees from HSBC affiliates		234			—			234			220			—			220
	Other income		407			—			407			245			—			245
Total other revenues		$	2,650		$	(191	)	$	2,459		$	2,671		$	(499	)	$	2,172
Average receivables:
	Real estate secured	$	89,005		$	—		$	89,005		$	68,346		$	44		$	68,390
	Auto finance		11,175			941			12,116			8,144			2,229			10,373
	MasterCard/ Visa		24,045			1,431			25,476			15,853			6,144			21,997
	Private label		2,507			—			2,507			3,122			—			3,122
	Personal non-credit card		20,162			690			20,852			16,652			3,126			19,778
	Commercial and other		204			—			204			283			—			283
	Purchase accounting fair value adjustments		30			—			30			169			—			169
Average receivables		$	147,128		$	3,062		$	150,190		$	112,569		$	11,543		$	124,112
Average noninsurance investments			2,318			—			2,318			3,016			—			3,016
Other interest-earning assets			698			—			698			669			—			669
Average interest-earning assets		$	150,144		$	3,062		$	153,206		$	116,254		$	11,543		$	127,797
Net interest income as a percentage of average interest-earning assets			6.68	%		11.10	%		6.77	%		6.75	%		10.07	%		7.05	%

⁽¹⁾  When reporting on a managed basis, finance and other interest income, interest expense, provision for credit losses and fee income related to securitized receivables are reclassified from securitization related revenue in our owned statements of income into the appropriate caption.

10

HSBC Finance Corporation

RECONCILIATION TO GAAP FINANCIAL MEASURES

Selected Financial Ratios

			Three Months Ended									Six Months Ended
			6/30/06			3/31/06			6/30/05			6/30/06			6/30/05
						(dollars are in millions)
Return on Average Common Shareholder’s Equity:
Net income			$	568		$	888		$	472		$	1,456		$	1,098
	Dividends on preferred stock			(9	)		(9	)		(19	)		(18	)		(37	)
Net income available to common shareholders			$	559		$	879		$	453		$	1,438		$	1,061
Average common shareholder’s equity			$	19,975		$	19,379		$	16,671		$	19,677		$	16,421
Return on average common shareholder’s equity				11.19	%		18.14	%		10.87	%		14.62	%		12.92	%
Return on Average Assets:
Net income			$	568		$	888		$	472		$	1,456		$	1,098
Average assets:
		Owned basis	$	167,505		$	162,688		$	134,834		$	165,097		$	133,394
		Serviced with limited recourse		2,620			3,505			10,203			3,062			11,543
		Managed basis	$	170,125		$	166,193		$	145,037		$	168,159		$	144,937
Return on average owned assets				1.36	%		2.18	%		1.40	%		1.76	%		1.65	%
Return on average managed assets				1.34			2.14			1.30			1.73			1.52
Efficiency Ratio:
Total costs and expenses less policyholders’ benefits			$	1,496		$	1,532		$	1,375		$	3,028		$	2,831
Net interest income and other revenues less policyholders’ benefits:
		Owned basis	$	3,641		$	3,797		$	3,092		$	7,438		$	6,356
		Serviced with limited recourse		(29	)		8			52			(21	)		82
		Managed basis	$	3,612		$	3,805		$	3,144		$	7,417		$	6,438
Owned basis efficiency ratio				41.09	%		40.35	%		44.47	%		40.71	%		44.54	%
Managed basis efficiency ratio				41.42			40.26			43.73			40.83			43.97
Managed Basis Risk Adjusted Revenue:
Net interest income			$	2,616		$	2,567		$	2,284		$	5,183		$	4,504
Other revenues, excluding securitization related revenue as well as the mark-to-market on derivatives which do not qualify as effective hedges and ineffectiveness associated with qualifying hedges under SFAS No. 133				1,183			1,357			1,135			2,540			2,394
Less: Net charge-offs				(1,121	)		(990	)		(1,028	)		(2,111	)		(2,146	)
Risk adjusted revenue			$	2,678		$	2,934		$	2,391		$	5,612		$	4,752
Average interest-earning assets			$	155,641		$	150,771		$	129,726		$	153,206		$	127,797
Managed basis risk adjusted revenue				6.88	%		7.78	%		7.37	%		7.33	%		7.44	%

11

HSBC Finance Corporation

RECONCILIATION TO GAAP FINANCIAL MEASURES

Credit Quality/ Credit Loss Reserves

		Two-Months-and-Over Contractual Delinquency							Quarter-to-Date Charge-offs,
									Net of Recoveries
		Two-Months-				Two-Months-
		and-Over		Consumer		and-Over			Net		Average
		Contractual		Receivables		Contractual			Charge-		Consumer		Net
		Delinquency		Outstanding		Delinquency(1)			offs		Receivables		Charge-offs(1)
		(dollars are in millions)
June 30, 2006
	Owned:
	First mortgage	$	1	$	18		6.76	%	$	—	$	19		.96	%
	Real estate secured		2,368		93,893		2.52			222		91,347		.97
	Auto finance		264		11,723		2.25			69		11,419		2.43
	MasterCard/ Visa		1,037		24,959		4.16			351		24,224		5.80
	Private label		137		2,522		5.42			33		2,510		5.29
	Personal non-credit card		1,845		20,664		8.93			404		20,414		7.92
	Total	$	5,652	$	153,779		3.68	%	$	1,079	$	149,933		2.88	%
	Serviced with Limited Recourse:
	Auto finance	$	37	$	693		5.34	%	$	14	$	803		6.97	%
	MasterCard/ Visa		17		750		2.27			13		1,252		4.15
	Personal non-credit card		56		468		11.97			14		565		9.91
	Total	$	110	$	1,911		5.76	%	$	41	$	2,620		6.26	%
	Managed:
	First mortgage	$	1	$	18		6.76	%	$	—	$	19		.96	%
	Real estate secured		2,368		93,893		2.52			222		91,347		.97
	Auto finance		301		12,416		2.43			83		12,222		2.73
	MasterCard/ Visa		1,054		25,709		4.10			364		25,476		5.73
	Private label		137		2,522		5.42			33		2,510		5.29
	Personal non-credit card		1,901		21,132		9.00			418		20,979		7.97
	Total	$	5,762	$	155,690		3.70	%	$	1,120	$	152,553		2.94	%
March 31, 2006
	Owned
	First mortgage	$	1	$	19		6.09	%	$	—	$	20		4.52	%
	Real estate secured		2,200		89,492		2.46			163		86,664		.75
	Auto finance		185		11,186		1.65			96		10,930		3.50
	MasterCard/ Visa		1,020		23,449		4.35			239		23,865		4.00
	Private label		133		2,428		5.50			35		2,504		5.62
	Personal non-credit card		1,773		20,006		8.86			395		19,910		7.94
	Total	$	5,312	$	146,580		3.62	%	$	928	$	143,893		2.58	%
	Serviced with Limited Recourse:
	Auto finance	$	39	$	920		4.24	%	$	32	$	1,079		11.86	%
	MasterCard/ Visa		34		1,528		2.23			11		1,611		2.73
	Personal non-credit card		80		661		12.10			19		815		9.33
	Total	$	153	$	3,109		4.92	%	$	62	$	3,505		7.08	%
	Managed:
	First mortgage	$	1	$	19		6.09	%	$	—	$	20		4.52	%
	Real estate secured		2,200		89,492		2.46			163		86,664		.75
	Auto finance		224		12,106		1.85			128		12,009		4.27
	MasterCard/ Visa		1,054		24,977		4.22			250		25,476		3.92
	Private label		133		2,428		5.50			35		2,504		5.62
	Personal non-credit card		1,853		20,667		8.97			414		20,725		7.98
	Total	$	5,465	$	149,689		3.65	%	$	990	$	147,398		2.69	%

⁽¹⁾  Certain percentages may not recompute from the dollar figures presented due to rounding.

12

HSBC Finance Corporation

RECONCILIATION TO GAAP FINANCIAL MEASURES

Credit Quality/ Credit Loss Reserves (Continued)

		Two-Months-and-Over Contractual Delinquency							Quarter-to-Date Charge-offs,
									Net of Recoveries
		Two-Months				Two-Months-
		and-Over		Consumer		and-Over			Net		Average
		Contractual		Receivables		Contractual			Charge-		Consumer		Net
		Delinquency		Outstanding		Delinquency(1)			offs		Receivables		Charge-offs(1)
		(dollars are in millions)
June 30, 2005 Owned:
	First mortgage	$	1	$	24		6.24	%	$	—	$	24		.03	%
	Real estate secured		1,841		71,930		2.56			137		70,205		.78
	Auto finance		187		8,997		2.08			56		8,510		2.61
	MasterCard/ Visa		722		17,421		4.14			288		16,626		6.93
	Private label		143		2,905		4.91			33		3,017		4.36
	Personal non-credit card		1,525		17,255		8.84			330		16,972		7.77
	Total	$	4,419	$	118,532		3.73	%	$	844	$	115,354		2.93	%
	Serviced with Limited Recourse:
	Real estate secured	$	—	$	—		—	%	$	—	$	12		—	%
	Auto finance		104		1,819		5.72			41		1,994		8.22
	MasterCard/ Visa		114		4,752		2.40			70		5,440		5.15
	Personal non-credit card		266		2,409		11.04			73		2,757		10.59
	Total	$	484	$	8,980		5.39	%	$	184	$	10,203		7.21	%
	Managed:
	First mortgage	$	1	$	24		6.24	%	$	—	$	24		.03	%
	Real estate secured		1,841		71,930		2.56			137		70,217		.78
	Auto finance		291		10,816		2.69			97		10,504		3.68
	MasterCard/ Visa		836		22,173		3.77			358		22,066		6.49
	Private label		143		2,905		4.91			33		3,017		4.36
	Personal non-credit card		1,791		19,664		9.11			403		19,729		8.17
	Total	$	4,903	$	127,512		3.85	%	$	1,028	$	125,557		3.28	%

⁽¹⁾  Certain percentages may not recompute from the dollar figures presented due to rounding.

13

HSBC Finance Corporation

RECONCILIATION TO GAAP FINANCIAL MEASURES

Credit Quality/ Credit Loss Reserves (Continued)

				Serviced with
	Owned			Limited Recourse		Managed
	(dollars are in millions)
Real Estate Charge-offs and REO Expense:
Three months ended June 30, 2006
Real estate charge-offs and REO expense	$	238		$	—	$	238
Average real estate secured receivables		91,347			—		91,347
Real estate charge-offs and REO expense as a percentage of average real estate secured receivables(1)		1.04	%		—		1.04	%
Three months ended March 31, 2006
Real estate charge-offs and REO expense	$	193		$	—	$	193
Average real estate secured receivables		86,664			—		86,664
Real estate charge-offs and REO expense as a percentage of average real estate secured receivables(1)		.89	%		—		.89	%
Three months ended June 30, 2005
Real estate charge-offs and REO expense	$	147		$	—	$	147
Average real estate secured receivables		70,205			12		70,217
Real estate charge-offs and REO expense as a percentage of average real estate secured receivables(1)		.84	%		—		.84	%

⁽¹⁾  Certain percentages may not recompute from the dollar figures presented due to rounding.

14

HSBC Finance Corporation

RECONCILIATION TO GAAP FINANCIAL MEASURES

Credit Quality/ Credit Loss Reserves (Continued)

				Serviced with
	Owned			Limited Recourse			Managed
	(dollars are in millions)
Credit Loss Reserves:
Three months ended June 30, 2006
Reserves for receivables at beginning of quarter	$	4,468		$	161		$	4,629
Provision for credit losses		1,248			(29	)		1,219
Charge-offs, net of recoveries		(1,080	)		(41	)		(1,121	)
Other, net		13			—			13
Reserves for receivables at end of quarter	$	4,649		$	91		$	4,740
Receivables	$	153,959		$	1,911		$	155,870
Credit loss reserves as a percent of receivables		3.02	%		4.76	%		3.04	%
Three months ended March 31, 2006
Reserves for receivables at beginning of quarter	$	4,521		$	215		$	4,736
Provision for credit losses		866			8			874
Charge-offs, net of recoveries		(928	)		(62	)		(990	)
Other, net		9			—			9
Reserves for receivables at end of quarter	$	4,468		$	161		$	4,629
Receivables	$	146,767		$	3,109		$	149,876
Credit loss reserves as a percent of receivables		3.04	%		5.18	%		3.09	%
Three months ended June 30, 2005
Reserves for receivables at beginning of quarter	$	3,581		$	661		$	4,242
Provision for credit losses		1,031			52			1,083
Charge-offs, net of recoveries		(844	)		(184	)		(1,028	)
Other, net		(12	)		(4	)		(16	)
Reserves for receivables at end of quarter	$	3,756		$	525		$	4,281
Receivables	$	118,761		$	8,980		$	127,741
Credit loss reserves as a percent of receivables		3.16	%		5.85	%		3.35	%
Nonperforming Assets:
June 30, 2006
Nonaccrual receivables	$	3,595		$	80		$	3,675
Accruing receivables 90 or more days delinquent		758			12			770
Renegotiated commercial loans		1			—			1
Total nonperforming receivables		4,354			92			4,446
Real estate owned		620			—			620
Total nonperforming assets	$	4,974		$	92		$	5,066
Credit loss reserves as a percent of nonperforming receivables		106.8	%		—			106.6	%
March 31, 2006
Nonaccrual receivables	$	3,525		$	103		$	3,628
Accruing receivables 90 or more days delinquent		740			23			763
Renegotiated commercial loans		1			—			1
Total nonperforming receivables		4,266			126			4,392
Real estate owned		563			—			563
Total nonperforming assets	$	4,829		$	126		$	4,955
Credit loss reserves as a percent of nonperforming receivables		104.7	%		—			105.4	%
June 30, 2005
Nonaccrual receivables	$	3,008		$	340		$	3,348
Accruing receivables 90 or more days delinquent		482			55			537
Renegotiated commercial loans		1			—			1
Total nonperforming receivables		3,491			395			3,886
Real estate owned		459			—			459
Total nonperforming assets	$	3,950		$	395		$	4,345
Credit loss reserves as a percent of nonperforming receivables		107.6	%		—			110.2	%

15 -----END PRIVACY-ENHANCED MESSAGE-----