MOODY'S HIGH RATINGS OF HSBC HOLDINGS AND ITS MAIN OPERATING BANKS REMAIN SUPPORTED BY THE GROUP'S STRONG RECURRING EARNINGS AND ITS DIVERSIFIED FRANCHISE
London, March 05, 2002 -- Moody's Investors Service said that the high ratings of HSBC Holdings and the group's main operating banks continue to benefit from the HSBC group's strong and increasingly well diversified earnings and franchises, which have enabled the group to comfortably absorb the considerable provisions raised for 2001.
Moody's noted that HSBC reported operating profit before provisions for 2001 of USD 10.5 billion. These results provide ample cover for the year's increased provisions, which included USD 1.1 billion relating to Argentina, and USD 575m relating to Princeton. The rating agency also noted the considerable diversification of the group's earnings both regionally and by business lines, and the increased diversification which has been achieved, following the successful acquisitions and integration of Credit Commercial de France, Republic National Bank of New York, and Safra Republic Holdings in recent years. These acquisitions have strengthened the group's positions in North America, Europe and in private banking. Significant profits are generated in Europe - principally the United Kingdom - in Hong Kong, and in North America, with the rest of Asia and other regions also providing a material contribution. In terms of business lines, there is a good spread of profit contribution across personal, commercial, corporate and investment banking. Moody's said that in addition to earnings diversification, the group's generally strong financial fundamentals, the stable local franchises of many of the group's operations, and effective central controls are also important factors in determining HSBC's high credit ratings, despite the inherent volatility of earnings associated with a large presence in emerging markets.
Moody's rates numerous entities within the HSBC group. The principal rated affiliated are listed below, showing their long and short term deposit ratings and financial strength ratings respectively:
HSBC Bank plc - Aa2/P-1/B+
Hongkong and Shanghai Bank Corp - A3/P-1/B
Hang Seng Bank - A3/P-1/B
HSBC Bank USA - Aa3/P-1/B
Credit Commercial de France - Aa3/P-1/B
HSBC Republic Bank (Suisse) - Aa3/P-1/B
HSBC Holding - A2 (subordinated debt)
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