exv99

This document, and subsequent discussion, contains certain forward-looking information with respect to the financial condition, results of operations and business of HSBC Holdings plc, HSBC Finance Corporation, HSBC USA Inc. and HSBC North America Holdings Inc. 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 2005 Annual Report, and the HSBC Finance Corporation and HSBC USA Inc. Annual Reports on Forms 10-K for the year ended December 31, 2005 and Quarterly Reports on Forms 10-Q for the quarter ended March 31, 2006.


•	*International Financial Reporting Standards (“IFRSs”)* From January 1, 2005, HSBC Holdings plc (“HSBC”) has prepared its consolidated financial statements in accordance with International Financial Reporting Standards as endorsed by the European Union. IFRSs comprise accounting standards issued by the International Accounting Standards Board and its predecessor body as well as interpretations issued by the International Financial Reporting Interpretations Committee and its predecessor body. Please see HSBC’s 2005 Annual Report for more detail regarding significant accounting policies.

•	*HSBC Finance Corporation — Managed Basis* (a non-GAAP financial measure) assumes that securitized customer loans have not been sold and remain on the HSBC Finance Corporation balance sheet.

•	*HSBC Finance Corporation — Management Basis* In addition to managed basis reporting, operations are monitored and trends are evaluated 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 customer loans transferred from HSBC Finance Corporation to HSBC’s U.S. banking subsidiary, HSBC Bank USA, N.A. (“HSBC Bank USA”), have not been sold and remain on the HSBC Finance Corporation balance sheet. Additionally, operations are monitored and trends are evaluated on a management basis because the customer loan sales to HSBC Bank USA were conducted primarily to more appropriately fund prime customer loans within the HSBC Group and such customer loans continue to be managed and serviced by us without regard to ownership. Furthermore, operating results are reviewed and decisions are made about allocating resources such as employees on a management basis.


•	*HSBC Finance Corporation — IFRS Management Basis* (a non-GAAP financial measure) represents management basis results adjusted in accordance with IFRSs. In this document, the term “customer loans” is synonymous to “receivables” in our U.S. GAAP financial statements.

•	*HSBC USA Inc. — IFRS* represents HSBC USA Inc. U.S. GAAP results adjusted in accordance with IFRSs.


		Three Months Ended

		March 31,		December 31,		March 31,
		2006		2005		2005

		(millions $)
Profit for the Period (after-tax):
HSBC Finance Corporation		$	930	$	766	$	824
HSBC USA Inc.			287		179		297

	Sub-total		1,217		945		1,121
	Intercompany Eliminations⁽¹⁾		68		110		107

Combined Profit for the Period		$	1,285	$	1,055	$	1,228


	–	Solid results from all businesses

	–	Favorable credit performance related to lower bankruptcies, customer loan growth and a continued strong U.S. economy

	–	Integration of Metris on schedule

	–	First quarter results include seasonal Taxpayer Financial Services revenues


	–	Decreased bankruptcy filings following change in U.S. legislation in October 2005, which accelerated Loan Impairment Charges in the fourth quarter of 2005, a portion of which would have been experienced in 2006

	–	Reduction of estimated exposure associated with Hurricane Katrina in the first quarter of 2006

	–	Lower Loan Impairment Charges due to growing mix of near-prime loans in residential mortgage and motor vehicle finance

	–	Continued favorable U.S. consumer credit environment, although housing market showing modest signs of slowing in some markets


	When reporting on a management basis, net interest income, fee income and loan impairment charges are adjusted to include the activity associated with these customer loans transferred to HSBC Bank USA. Gains on sales, loan premium amortization and the related servicing fees are eliminated. Management believes 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.

	Certain adjustments have been made to prior period amounts to conform to the current period presentation.


⁽¹⁾	Primarily relates to intercompany derivatives accounting and premium amortization on the transfer of assets between HSBC Finance Corporation and HSBC USA Inc.


	–	Profit Before Tax increased 13%. Excluding derivative and fair value impacts, Profit Before Tax increased 49%.


•	Net Interest Income increased 12% year-over-year due to strong customer loan growth


	–	Average Customer Loans grew 18% year-over-year with solid organic growth across all products


•	Loan Impairment Charges decreased from both the prior quarter and prior year first quarter


⁽¹⁾	Includes ineffectiveness on qualifying hedges and mark-to-market on non-qualifying hedges that are not managed in conjunction with the debt securities in issue designated at fair value of $14, ($39) and $156 million for the quarters ended March 31, 2006, December 31, 2005 and March 31, 2005, respectively.

⁽²⁾	Includes gains and losses from changes in fair value of debt securities in issue designated at fair value and gains and losses from changes in fair value of derivatives that are managed in conjunction with them.


•	Net Interest Margin (NIM) down from the prior year first quarter and flat sequentially


	–	Overall yield increased in the quarter due to repricing efforts which were offset by a higher mix of residential mortgage customer loans and higher cost of funds


•	RAR improved from the prior quarter and prior year first quarter driven by lower charge-offs


		Three Months Ended

		March 31,			December 31,			March 31,
		2006			2005			2005

		(millions $)
Net Interest Income		$	2,873		$	2,694		$	2,558
Net Fee Income			819			699			703
Trading Income⁽¹⁾			66			65			208
Net Income/(Expense) from Financial Instruments Designated at Fair Value⁽²⁾			(5	)		36			176
Other Operating Income			145			336			110

	Total Operating Income		3,898			3,830			3,755
Loan Impairment Charges and Other Credit Risk Provisions			904			1,447			1,048
Operating Expenses			1,436			1,400			1,333

	Profit Before Tax		1,558			983			1,374
Tax Expense			546			164			472

	Profit for the Period	$	1,012		$	819		$	902

Cost Efficiency Ratio			36.8	%		36.6	%		35.5	%
Operating Expenses/ Average Customer Loans			3.4	%		3.5	%		3.8	%


								March 06
								Increase/(Decrease)

								%

		March 06		Dec 05		March 05		Dec 05			Marh 05

		(millions $)
Branch Residential Mortgage		$	43,062	$	41,341	$	38,166		4	%		13	%
Correspondent Residential Mortgage			49,330		44,297		35,094		11			41

	Residential Mortgage		92,392		85,638		73,260		8			26
MasterCard/ Visa⁽¹⁾Credit Cards			24,740		25,819		21,739		(4	)		14
Private Label Cards			18,402		19,656		18,019		(6	)		2
Motor Vehicle Finance			12,113		11,911		10,313		2			17
Other Unsecured Personal Lending			20,844		20,745		19,771		—			5
Commercial and Other			31		33		93		(6	)		(67	)

	Total Customer Loans	$	168,522	$	163,802	$	143,195		3	%		18	%


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


Auto		International

• Good organic loan growth in dealer channel • Customer loan mix shift toward near-prime producing lower charge-offs and higher risk adjusted revenues • Continue to refine collection strategies to improve cash collections Taxpayer Financial Services • Expanded relationships with existing partners • Expanded product offerings to include prepaid debit cards		Canada • Good loan growth and profitability – Branch expansion contributed to strong growth in unsecured and residential mortgage products – Growth initiatives in motor vehicle and credit card contributed favorably to customer loan growth • Credit quality stable UK • Focus remains on credit and loss mitigation in a continued challenging environment


⁽¹⁾	Derived from U.S. GAAP reported results and adjusted to management basis as further described on page 3.

⁽²⁾	Excludes mark-to-market on derivatives which do not qualify as effective hedges and ineffectiveness associated with qualifying hedges under SFAS No. 133.


•	The first quarter 2006 charge-off ratio decreased from fourth quarter 2005 primarily due to the fourth quarter spike in bankruptcy charge-offs in the U.S. as a result of new bankruptcy legislation effective October 2005

•	RAR improved from the prior quarter and prior year first quarter driven by lower charge-offs


Retail Branch Channel		Correspondent/
(HFC/Beneficial)		Wholesale Channel

• Continued good loan growth – Residential mortgage products up 4% over prior quarter and 13% year-over-year o Includes both near-prime and non-prime segments o Junior liens a good source of growth • Cross sell volume continues to expand – Motor vehicle loans and credit card sales in branches contribute to overall growth • Credit quality remains stable although housing market showing modest signs of slowing		• Strong residential mortgage growth – Portfolio up 11% over prior quarter and 41% year-over-year • Improved returns on new production • Run-off slowed from prior quarter to prior year first quarter levels • Monitoring credit quality closely given the housing market showing modest signs of slowing


Credit Card		Private Label

• Strong year-over-year profits, good organic loan and operating income growth • Increased net interest margin year-over-year by growing non-prime book and repricing efforts • Strong growth in fee and other operating income from the prior year first quarter due to growing portfolio and higher interchange fees • Improved credit quality driven by lower bankruptcy charge-offs and filings • Metris integration on schedule • Estimates of the potential impact of the change in minimum payment guidelines take into account a number of factors which are difficult to predict at this time and are being closely monitored		• Signed new merchant, Boscov’s Department Stores, in April • Expanded private label programs with two of our merchants through enhanced underwriting, terms and customer service • Risk adjusted revenue performing well compared to the prior quarter as positive credit trends mitigated margin compression • Estimates of the potential impact of the change in minimum payment guidelines take into account a number of factors which are difficult to predict at this time and are being closely monitored


•	Solid quarter including continuing progress on strategic initiatives


	–	Domestic deposits grew 20% year-over-year and reflect impact of nationwide Online Savings roll out and branch expansion

	–	Small business, middle market, and large corporate commercial loans grew a combined 14% year-over-year

	–	Total Operating Income increased 8% from prior year first quarter and was spread across all customer groups


•	Profit for the Period down 3% from the prior year first quarter but up from the prior quarter


	–	Quarterly results reflect a $40 million before tax charge from fair value option accounting


•	Net Interest Income (NII) was lower than the prior year first quarter largely due to a flatter yield curve and the impact on balance sheet management income in Corporate, Investment Banking and Markets (CIBM)


	–	Balance sheet management income was $105 million lower than prior year first quarter but was offset by higher trading income which was $137 million above prior year first quarter, principally recorded in Global Markets business

	–	Growing core customer deposit base in Personal Financial Services, Commercial Banking and Private Banking contributed to overall NII


	–	Loan impairment increases relate principally to commercial releases/recoveries in the prior year first quarter

	–	Consumer Finance loan impairment charges increased on higher loan volumes while bankruptcy filings decreased significantly


•	Increased Operating Expenses reflect recent investment initiatives


	–	Expansion of retail distribution network including addition of branches and the rollout of the Online Savings Account

	–	Build-out of CIBM business platform is largely complete; quarterly comparisons reflect 2005 investments


Personal Financial Services (PFS)		Commercial Banking (CMB)

• Success in numerous initiatives to broaden distribution channels – Online Savings deposits totaled $3.8 billion at March 31, 2006, up from $1.0 billion at December 2005 • Branch network expansion continued with 4 new locations added during the first quarter 2006 • Finalized an agreement to brand ATMs in Walgreens stores in northern New Jersey • Americas Premier Center (APC) opened in Miami showing strong early deposit momentum • “Different Points of View” global branding initiative launched with new ad campaign at JFK Airport • Operating Expenses increased from prior year first quarter, half of which reflects initiatives to expand distribution channels		• Good year-over-year deposit and loan growth • Expanded markets and distribution through new lending office in Washington, DC and Embassy Banking referral arrangement with Wachovia • Increased syndication capabilities led to higher fee income in Commercial Real Estate • Good credit quality in Middle Market and Real Estate


		Corporate, Investment Banking
Private Banking (PB)		and Markets (CIBM)

• Strong operating income growth from the prior year first quarter due in part to higher performance fees on foreign investments • Good year-over-year deposit and loan growth on marketing initiatives targeting new and existing clients • Expanded Wealth and Tax Advisory Services with new offices in Seattle, Chicago and Palo Alto		• Significantly higher trading revenues offset lower balance sheet management revenues in net interest income • Growth in markets related revenues recorded in derivatives, precious metals and mortgage backed securities • Transaction Banking revenues and deposits up over prior year – Reflects HSBC’s market leader position in developing cross border payments and cash management services • Operating expenses increased from the prior year first quarter, essentially flat from prior quarter and reflects costs associated with business expansion initiatives


		Three Months Ended 03/31/06									Three Months Ended 12/31/05									Three Months Ended 03/31/05

					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

		(dollars are in millions)
Net interest income		$	2,464		$	409		$	2,873		$	2,298		$	396		$	2,694		$	1,888		$	670		$	2,558
Net fee income			392			427			819			469			230			699			306			397			703
Trading income			-			66			66			-			65			65			-			208			208
Net income/(expense) from financial instruments designated at fair value			-			(5	)		(5	)		-			36			36			-			176			176
Other operating income			1,015			(870	)		145			674			(338	)		336			1,156			(1,046	)		110

Total operating income			3,871			27			3,898			3,441			389			3,830			3,350			405			3,755

Loan impairment charges and other credit risk provisions			866			38			904			1,310			137			1,447			841			207			1,048
Operating expenses			1,606			(170	)		1,436			1,542			(142	)		1,400			1,542			(209	)		1,333

Profit before tax			1,399			159			1,558			589			394			983			967			407			1,374
Tax expense			511			35			546			196			(32	)		164			341			131			472

Profit for the period		$	888		$	124		$	1,012		$	393		$	426		$	819		$	626		$	276		$	902

Cost Efficiency Ratio:
Total operating expenses		$	1,606		$	(170	)	$	1,436		$	1,542		$	(142	)	$	1,400		$	1,542		$	(209	)	$	1,333
Policyholders’ benefits			(118	)		118			-			(109	)		109			-			(122	)		122			-

Total operating expenses, excluding policyholders’ benefits		$	1,488		$	(52	)	$	1,436		$	1,433		$	(33	)	$	1,400		$	1,420		$	(87	)	$	1,333

Net interest income and other operating income		$	3,871		$	27		$	3,898		$	3,441		$	389		$	3,830		$	3,350		$	405		$	3,755
Policyholders’ benefits			(118	)		118			-			(109	)		109			-			(122	)		122			-

Net interest income and other operating income, excluding policyholders’ benefits		$	3,753		$	145		$	3,898		$	3,332		$	498		$	3,830		$	3,228		$	527		$	3,755

Cost efficiency ratio			39.6	%					36.8	%		43.0	%					36.6	%		44.0	%					35.5	%

Profit for the period growth:
	Profit for the period	$	888		$	124		$	1,012		$	393		$	426		$	819		$	626		$	276		$	902
	IFRS management basis profit for the period growth:
	03/31/06 compared to 03/31/05								12	%


		Three Months Ended

		March 31, 2006			March 31, 2005

		(dollars are in millions)
Net Interest Income:
Net interest income:
	Owned basis	$	2,464		$	1,888
	Management basis adjustments		435			711

	Management basis	$	2,899		$	2,599

Average interest-earning assets:
	Owned basis	$	147,266		$	112,985
	Managed basis adjustments		3,505			12,884
	Management basis adjustments		20,831			20,225

	Management basis	$	171,602		$	146,094

Owned basis net interest margin			6.7	%		6.7	%
Management basis net interest margin			6.8			7.1

Return on Average Assets:
Profit for the period:
	Owned basis	$	888		$	626
	Management basis adjustments		80			72

	Management basis	$	968		$	698

Adjusted profit for the period:
	Owned basis	$	888		$	626
	Management basis adjustments		80			72
	Derivative adjustments		(34	)		(157	)

	Management basis adjusted for derivatives	$	934		$	541

Average assets:
	Owned basis	$	162,688		$	131,954
	Management basis adjustments		24,225			33,117

	Management basis	$	186,913		$	165,071

Return on average owned assets			2.2	%		1.9	%
Return on average management assets			2.1			1.7
Return on average management assets, adjusted for derivatives			2.0			1.3


		As at March 31, 2006							As at December 31, 2005							As at March 31, 2005

				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

		(dollars are in millions)
Customer Loans
Branch residential mortgage		$	43,034	$	28		$	43,062	$	41,270	$	71		$	41,341	$	37,862	$	304		$	38,166
Correspondent residential mortgage			46,458		2,872			49,330		41,556		2,741			44,297		30,624		4,470			35,094

	Residential mortgage		89,492		2,900			92,392		82,826		2,812			85,638		68,486		4,774			73,260
MasterCard/ Visa⁽¹⁾credit cards			23,449		1,291			24,740		24,110		1,709			25,819		15,554		6,185			21,739
Private label cards			2,428		15,974			18,402		2,520		17,136			19,656		3,130		14,889			18,019
Motor vehicle finance			11,186		927			12,113		10,704		1,207			11,911		8,107		2,206			10,313
Other unsecured personal lending			20,006		838			20,844		19,545		1,200			20,745		16,608		3,163			19,771
Commercial and other			206		(175	)		31		208		(175	)		33		276		(183	)		93

Total customer loans		$	146,767	$	21,755		$	168,522	$	139,913	$	23,889		$	163,802	$	112,161	$	31,034		$	143,195