2007 Interim Report >

CONTENTS
1 Results in Brief
2 Chief Executive’s Report
8 Financial Review
24 Consolidated Income Statement (unaudited)
25 Consolidated Balance Sheet (unaudited)
26 Consolidated Statement of Recognised Income and Expense (unaudited)
27 Consolidated Cash Flow Statement (unaudited)
28 Notes to the Financial Statements
72 Review Report to the Board of Directors
73 Additional Information

1
RESULTS IN BRIEF

30 June 30 June 31 December
2007 2006 2006

For the half-year ended HK$m HK$m HK$m
Operating profit excluding loan impairment charges and
other credit risk provisions 8,053 6,387 6,453
Operating profit 7,773 6,353 6,223
Profit before tax 10,218 7,513 6,882
Profit attributable to shareholders 8,867 6,190 5,848
HK$ HK$ HK$
Earnings per share 4.64 3.24 3.06
Dividends per share 2.20 2.20 3.00
At period-end HK$m HK$m HK$m
Shareholders’ funds 51,031 43,718 46,981
Total assets 741,322 628,289 669,064
Ratios % %%
For the half-year ended
Return on average shareholders’ funds 36.6 29.0 25.8
Cost efficiency ratio 26.6 26.8 31.0
Average liquidity ratio 52.9 50.9 53.0
At period-end
Total capital ratio 12.3 14.2 13.6
Tier 1 capital ratio 8.9 11.0 10.7
Capital ratios at 30 June 2007 were compiled in accordance with the Banking (Capital) Rules (“the Capital Rules”) issued by the Hong Kong
Monetary Authority under section 98A of the Hong Kong Banking Ordinance for the implementation of the “Basel II” capital accord,
which became effective on 1 January 2007. In accordance with the Capital Rules, the Bank has adopted the “standardised approach” for
the calculation of the risk-weighted assets for credit risk and operational risk and the “internal models approach” for the calculation of
market risk. The basis of consolidation for calculation of capital ratios under the Capital Rules follows the basis of consolidation for
financial reporting with the exclusion of subsidiaries which are “regulated financial entities” (e.g. insurance and securities companies) as
defined by the Capital Rules. Accordingly, the investment costs of these unconsolidated regulated financial entities are deducted from the
capital base.
The capital ratios at 30 June and 31 December 2006 were compiled in accordance with the then Third Schedule of the Hong Kong
Banking Ordinance (“the Third Schedule”) under the “Basel I” capital accord. As there are significant differences between the Capital Rules
and the Third Schedule on requirements in the scope of consolidation and the calculation of capital base and risk-weighted assets, the
capital ratios are not directly comparable.

CHIEF EXECUTIVE’S REPORT
2
Hang Seng’s record results for the first half of 2007 reflect excellent progress with our long-term growth strategy, supported
by buoyant economic conditions.
Attributable profit rose by 43.2 per cent to HK$8,867 million. Earnings per share were HK$4.64, an increase of 43.2 per cent.
Underpinned by strong growth in our wealth management and Commercial Banking businesses, operating profit excluding
loan impairment charges and other credit risk provisions rose by 26.1 per cent to HK$8,053 million. Operating profit was up
HK$1,420 million, or 22.4 per cent, at HK$7,773 million, the highest rate of growth for 11 years.
Pre-tax profit grew by 36 per cent to HK$10,218 million, in part reflecting an unrealised gain of HK$1,465 million on the
dilution of our investment in our strategic mainland China partner Industrial Bank following its listing in February this year.
The Directors have declared a second interim dividend of HK$1.10 per share, bringing the total distribution for the first half
of 2007 to HK$2.20, the same as in the first half of 2006.
In action
Our wide range of product offerings and sharp focus on personalised financial solutions helped our wealth management
business go from strength to strength, with securities turnover and sales of investment funds and structured products breaking
all previous highs. Private banking remained on a strong growth trend.
We continued to enhance services for Commercial Banking customers, strengthening our position as the preferred bank for
small and medium-sized enterprises (SMEs). We capitalised on positive business sentiment, registering a significant increase
in customer advances. We made pleasing progress with the development of our corporate wealth management business.
Treasury’s balance sheet management portfolios reversed their downward trend. To further grow customer-driven business,
we stepped up cross-customer group cooperation and put additional resources into structured product development. Such
actions have placed Treasury in a better position to deliver profit growth.
Moves to further diversify Corporate Banking’s income proved successful, with significant increases in customer deposits,
trade services and credit facility fees.
In late May, our wholly owned Mainland subsidiary bank – Hang Seng Bank (China) Limited (Hang Seng China) – commenced
operations, marking the start of a new era of business growth. We have also opened a third Guangzhou outlet and two new
sub-branches in Shanghai since the beginning of the year, further strengthening our service capabilities in regions with good
long-term growth potential.
Financial highlights
Net interest income grew by HK$1,155 million, or 20.8 per cent, to HK$6,696 million, supported by a 10 per cent rise in
average customer deposits and a 9.7 per cent increase in average customer advances. Net interest margin rose by 10 basis
points to 2.11 per cent, underpinned by improvements in deposit spreads, Treasury balance sheet management portfolio
yields and contribution from net free funds.
Average interest-earning assets grew by 15.1 per cent. Total assets increased by HK$72.3 billion, or 10.8 per cent, to HK$741.3
billion.

3
The active investment market helped drive a HK$340 million increase in revenue from stockbroking and related services to
HK$738 million as well as rises in income from retail investment fund and third-party structured product sales of HK$244
million and HK$217 million respectively. Along with strong growth of 108.1 per cent and 19.9 per cent in private banking
business and card services income respectively, this supported the HK$1,080 million, or 60.6 per cent, increase in net fee
income to HK$2,862 million.
Revenue from securities, derivatives and other trading rose by HK$141 million. This only partly offset the HK$216 million
decline in foreign exchange income caused by exchange losses on forward contracts relating to Treasury’s funding swap
activities and on Hang Seng China’s US dollar capital funds upon revaluation against the renminbi. Overall, trading income
was down HK$75 million, or 11.4 per cent, at HK$584 million.
Operating expenses rose by 24.6 per cent to HK$2,914 million, due largely to investments in our Mainland business –
including the establishment of Hang Seng China – as well as increases in performance-related pay and marketing costs.
Excluding Mainland-related costs and performance-based bonuses and incentives, operating expenses were up 8.9 per cent.
However, the rise in costs was outpaced by the 25.7 per cent growth in total operating income. With this positive differential
of 1.1 percentage points, our cost efficiency ratio was 0.2 percentage points lower at 26.6 per cent.
We also enhanced our staff productivity – operating profit per employee during the first half was over HK$900,000, a 14.1
per cent increase compared with a year earlier.
In June we launched a US$300 million subordinated notes offering. The issue has helped expand the breadth and depth of
our investor base and the proceeds will be used for general funding purposes, which may include our proposed acquisition of
the outstanding 50 per cent of Hang Seng Life.
At 30 June 2007, our total and tier 1 capital ratios were 12.3 per cent and 8.9 per cent respectively, as calculated under new
rules issued for the implementation of the Basel II capital accord.
We continue to enjoy excellent credit ratings. Moody’s Investors Service upgraded our long-term local currency deposit rating
to Aa1 in May and our long-term foreign currency deposit rating to Aa2 in July. Standard and Poor’s has assigned Hang Seng
China local and foreign currency counterparty ratings of A (long term) and A-1 (short term), the highest ratings assigned to
Mainland incorporated subsidiaries of foreign banks, and upgraded the outlook from stable to positive in late July.
Shareholders’ funds (excluding proposed dividends) increased by HK$5,580 million, or 12.9 per cent, to HK$48,928 million,
due largely to the HK$3,662 million increase in retained profits and the unrealised gain on the dilution of our investment in
Industrial Bank.
Return on average shareholders’ funds was 36.6 per cent, compared with 29 per cent in the first half of 2006. Excluding the
gain on dilution, return on average shareholders’ funds was 30.5 per cent.
Loans and deposits
Customer deposits, including certificates of deposit and other debt securities in issue, reached HK$558 billion, representing
a rise of 3.4 per cent over the end of 2006. Particularly strong growth was achieved with Corporate Banking and non-
borrowing SMEs.
Gross advances to customers at 30 June 2007 were HK$312 billion, an increase of HK$31.7 billion, or 11.3 per cent. This
amount included HK$26.9 billion in IPO-related financing.

Chief Executive’s Report (continued)
4
Corporate Banking increased lending to property investment and securities companies. However, large repayments of existing
loans in other sectors curtailed the growth of the overall Corporate Banking loan portfolio.
Sustained consumer demand and a successful series of promotional campaigns contributed to good growth in personal
loans, which increased by 18.6 per cent during the first half and 48.8 per cent year on year. Card advances rose by 3.8 per
cent and 29.3 per cent over 31 December 2006 and 30 June 2006 respectively.
Loans for use outside Hong Kong grew by 14.1 per cent to HK$25.3 billion. This was due largely to a 21.3 per cent rise in
lending by our Mainland branches, which achieved a 42.2 per cent increase in trade finance and strong growth in renminbi-
denominated corporate loans.
Total loan impairment allowances as a percentage of gross advances to customers improved to 0.31 per cent, compared with
0.33 per cent at the previous year-end. Gross impaired advances as a percentage of gross advances to customers remained
unchanged at 0.5 per cent.
Customer group highlights
Personal Financial Services attained a 35.9 per cent increase in operating profit excluding loan impairment charges to HK$5,380
million. Pre-tax profit was up 35.4 per cent at HK$5,278 million.
Wealth management income grew sharply by 58.2 per cent to reach a record HK$3,429 million. Stock trading turnover
reached a new high, with timely marketing and special promotions helping us increase our customer base.
Sales of investment funds and equity-linked structured products also enjoyed strong growth, rising by 88.6 per cent and
234.4 per cent respectively.
Our fund management achievements were recognised through awards and number one rankings given to Hang Seng funds
by organisations such as Lipper, Morningstar Asia and S & P’s Fund Services during the first half of 2007.
Strategic initiatives taken to meet our private banking growth objectives – including hiring more relationship managers and
extending our range of products – generated excellent results with total operating income rising by 60.7 per cent. Pre-tax
profit was up 62.4 per cent at HK$459 million.
Funds under management rose 13.7 per cent to HK$121 billion compared with the previous year-end.
The further enhancement of our retirement planning services drove a 37.1 per cent growth in life insurance income in the
first half of 2007 and helped make us Hong Kong’s number one provider in terms of annualised new premiums for regular-
pay (non-linked) insurance in the first quarter of the year.
We capitalised on positive consumer sentiment to grow cards in issue to 1.44 million. Card spending increased by 22.3 per
cent.
Residential mortgages fell slightly by 0.8 per cent. Amid intense market competition, we demonstrated our commitment to
our mortgage business through continuous investment in our e-mortgage website, making it both a resource centre and
sales channel. This helped us hold our position as one of the market leaders, striking a balance between market share and
profit contribution.

5
Commercial Banking’s operating profit excluding loan impairment charges rose by 15.3 per cent to HK$1,076 million, driven
by a 22.7 per cent increase in average customer advances as well as the expansion of corporate wealth management business
and improvements in deposit spreads. Pre-tax profit rose 17.2 per cent to HK$1,285 million.
The contribution of corporate wealth management income to Commercial Banking’s total operating income grew from 7.9
per cent to 9 per cent. In particular, strengthened collaboration between commercial relationship managers and treasury and
investment service teams saw treasury and investment income grow by 73.2 per cent.
We effectively promoted our comprehensive banking solution for retailers, growing our market share in this key sector. We
also enjoyed success in expanding our card merchant-acquiring business, resulting in a 40.9 per cent increase in related
income.
Commercial Banking’s average customer deposits rose 19.5 per cent, driven largely by non-borrowing SME customers.
The improved interest rate environment in the first half of 2007 saw Treasury’s operating profit increase by 2.7 per cent to
HK$456 million. Net operating income rose 5.1 per cent, with the improvement in yields on balance sheet management
portfolios. Including the increase in our share of profits from associates, pre-tax profit rose by 12.8 per cent to HK$571
million.
Corporate Banking’s 16 per cent rise in operating profit excluding loan impairment charges to HK$298 million was underpinned
by growth of 15.7 per cent in net interest income and 35 per cent in net fee income.
Net interest income growth was largely driven by the 28.9 per cent growth in average customer deposits. Average customer
advances were up 2.3 per cent, due mainly to lending to property investment, securities and information technology companies.
Pre-tax profit was down by HK$79 million at HK$192 million, reflecting an increase in loan impairment charges.
Mainland business
The opening of Hang Seng China in late May puts us in a stronger position to enlarge our service scope and build on the good
growth momentum generated during the first half of the year. Including Hang Seng Bank’s foreign currency wholesale
business branch in Shenzhen and Xiamen representative office, we now have 19 outlets on the Mainland.
We continued to focus on the affluent customer segment and commercial business in high-growth regions. Our number of
Mainland Prestige Banking accounts increased by 35 per cent during the first half of the year.
Total operating income of our Mainland operations grew by 86 per cent to HK$225 million, supported by a 21.3 per cent
increase in lending and a 42.7 per cent rise in deposits. Pre-tax profit was down HK$40 million, affected by the costs of
establishing our Mainland subsidiary, an exchange loss on US dollar capital funds upon revaluation against the renminbi and
an increase in loan impairment charges.
Closer collaboration with Industrial Bank improved customer convenience, with Hang Seng China’s Prestige Banking customers
now able to make deposits via 26 Industrial Bank outlets in Shanghai.
Including our share of profit from our strategic partner, the pre-tax profit of our Mainland business contributed 5.9 per cent
to total pre-tax profit, compared with 4.3 per cent a year earlier.

Chief Executive’s Report (continued)
6
e-channels
We continued to make effective use of technology to improve our cost efficiency and offer customers a more convenient banking
service. In June 2007, 51.3 per cent of all banking transactions were made online, up from 45.7 per cent in December last year.
Enhancements to our Personal e-Banking website helped us grow our number of Personal e-Banking customers by 10 per
cent compared with the end of 2006 to reach over 690,000. Personal e-Banking transactions increased by 12.7 per cent
compared with December last year. Internet transactions accounted for 71.6 per cent of securities trading and 81 per cent of
foreign exchange trading.
With intense competition in the mortgage sector, we used superior service rather than pricing to maintain our market
position. Our improved e-mortgage channel offers a one-stop solution with maximum flexibility as to when and where
customers can access up-to-date mortgage-related information and tools, obtain instant property valuations and make mortgage
applications. The number of online mortgage submissions made during the first half of 2007 grew by 249 per cent compared
with the first half of last year.
Year-on-year, revenue from Personal e-Banking sales and transactions grew by 93 per cent to HK$734 million in the first half
of 2007.
We also made good progress with the expansion of Business e-Banking, growing our number of accounts by 34.5 per cent
year on year to more than 44,000. Business e-Banking transaction volume grew by 46.2 per cent, reflecting the increasing
popularity of our e-channels.
Technology is also helping us reduce our use of natural resources. Over 150,000 accounts have now switched to electronic
statements, saving around 8 million sheets of paper per year. We will extend this electronic option to cover investment
product advice letters within the next few months.
Human resources
Our accomplishments rely in large part on the hard work and dedication of our people. Business expansion saw our number
of full-time equivalent staff increase by 161 during the first half to reach over 8,600. We continue to invest in staff development
by providing professional and technical training to expand skills and facilitate career development.
Corporate responsibility
As a good corporate citizen, we support our local communities in ways that go beyond the provision of premium financial
services. Our corporate responsibility programmes focus on education, the environment, sports development and the arts.
We also strive to promote more sustainable practices through our lending and investment policies as well as within our own
organisation.
Education is a key element of our efforts to promote social development. Through our support of the New Leaders Programme
organised by Junior Achievement Hong Kong, we enable young people to explore issues of ethical leadership and develop
sound values that will help them achieve future success. We are also working with the Hong Kong Youth Institute to encourage
positive innovation through the “Hang Seng Bank Social Entrepreneurship Programme”.
We have joined hands with the Hong Kong Federation of Industries to establish the “Hang Seng Pearl River Delta Environmental
Awards”, which aim to recognise and encourage improved environmental performance by factories in the Pearl River Delta region.
More details of our beliefs and many activities as a corporate citizen can be found in our second Corporate Responsibility
report, available online at: http://www.hangseng.com/hsb/eng/abo/cc/csr/06/index.html.

7
Moving forward
Economic growth in Hong Kong will maintain momentum during the second half of the year. The economy will continue to
benefit from the improving labour market, a favourable interest rate environment and strong growth on the Mainland.
Potential challenges include rising inflation risks created by the weakening US dollar and appreciating renminbi, which may
put upward pressure on costs. The prospects of further macro-economic policy tightening on the Mainland may also add
volatility to the performance of its economy and financial markets.
Against this backdrop, we will further develop wealth management, Commercial Banking and Mainland business as key
growth drivers. We will leverage our brand, leading market position and wide product range to attract new customers and
deepen relationships with existing ones. We will capitalise on the positive sentiment of consumers and the business community
to expand personal finance and commercial lending.
Supported by economic growth on the Mainland, we will take full advantage of new business opportunities following the
establishment of our subsidiary bank.
We will grow our customer base by continuing to focus on high-growth areas such as the Pearl River Delta, Yangtze River
Delta and Bohai Economic Rim regions. We are well advanced with preparations to open a Hangzhou branch and a sub-
branch in Beijing within the next few months and have more openings planned for later in the year. We will take further steps
to increase renminbi deposits to support lending growth. By 2010, we aim to have more than 2,000 staff and over 50 outlets
on the Mainland.
The significant progress made in the first half of 2007 provides encouraging support for our strategy for long-term business
growth. We will continue working to further enhance our position as a leading financial institution in Greater China and
achieve new heights of excellence for customers and shareholders.
Raymond Or
Vice-Chairman and Chief Executive
Hong Kong, 30 July 2007

FINANCIAL REVIEW
8
FINANCIAL PERFORMANCE

Income Statement
Summary of financial performance
Half-year ended Half-year ended Half-year ended
30 June 30 June 31 December
(Figures in HK$m) 2007 2006 2006
Total operating income 16,072 12,396 13,762
Total operating expenses 2,914 2,338 2,903
Operating profit excluding loan impairment
charges and other credit risk provisions 8,053 6,387 6,453
Profit before tax 10,218 7,513 6,882
Profit attributable to shareholders 8,867 6,190 5,848
Earnings per share (in HK$) 4.64 3.24 3.06
Hang Seng Bank Limited (“the Bank”) and its subsidiaries and associates (“the Group”) reported an unaudited profit attributable
to shareholders of HK$8,867 million for the first half of 2007, a rise of 43.2 per cent over the first half of 2006. Earnings per
share was HK$4.64, up 43.2 per cent.
Operating profit excluding loan impairment charges and other credit risk provisions rose by HK$1,666 million, or
26.1 per cent, to HK$8,053 million.
We increased our range of product offerings and further enhanced our service delivery channels, driving strong growth in our personal
wealth management and Commercial Banking businesses. Operating profit was up HK$1,420 million at HK$7,773 million.
Net interest income rose by HK$1,155 million to HK$6,696 million.
Half-year ended Half-year ended Half-year ended
30 June 30 June 31 December
2007 2006 2006

(Figures in HK$m) (restated)
Net interest income/(expense) arising from:
• financial assets and liabilities that are
not at fair value through profit and loss 7,609 6,399 7,290
• trading assets and liabilities (938) (879) (1,160)
• financial instruments designated at fair value 25 21 23
6,696 5,541 6,153

Average interest-earning assets 639,539 555,773 601,031
Net interest spread 1.72% 1.67% 1.66%
Net interest margin 2.11% 2.01% 2.03%
Deposit products contributed HK$514 million to the increase in net interest income. This was attributable to the increase of
10.0 per cent in average customer deposits, mainly in lower cost savings balances, and wider deposit spreads.
Average customer advances rose by 9.7 per cent, driven by encouraging growth in higher yielding card advances, personal
loans, trade finance and lending in mainland China. The pricing of residential mortgages and corporate lending, however,
remained under pressure due to intense market competition. Overall, the total loan portfolio contributed HK$153 million to
the growth in net interest income.

9
Net interest income of Treasury’s balance sheet management portfolios improved by HK$191 million as the holding of lower
yield securities gradually matured. The debt securities portfolio of life insurance funds grew by 45.0 per cent, adding HK$138
million to net interest income.
Benefiting from the rise in both interest rates and funds balance, net free funds (including non-interest-bearing account
balances and net shareholders’ funds) contributed HK$159 million to the increase in net interest income.
Net interest margin rose by 10 basis points to 2.11 per cent. Net interest spread increased by five basis points to 1.72 per cent,
contributed by wider deposit spreads and the gradual improvement of Treasury’s balance sheet management portfolio yields.
The contribution from net free funds also rose by five basis points to 0.39 per cent.
Compared with the second half of 2006, net interest income rose by HK$543 million, or 8.8 per cent, with a growth of 6.4
per cent in average interest-earning assets. Net interest margin improved by eight basis points, attributable mainly to wider
deposit spreads and contribution from net free funds.
The HSBC Group reports interest income and interest expense arising from financial assets and financial liabilities held for
trading as “Net trading income” and arising from financial instruments designated at fair value through profit and loss as
“Net income from financial instruments designated at fair value” (other than for debt securities in issue and subordinated
liabilities, together with derivatives managed in conjunction with them).
The table below presents the net interest income of Hang Seng, as included within the HSBC Group accounts:
Half-year ended Half-year ended Half-year ended
30 June 30 June 31 December
(Figures in HK$m) 2007 2006 2006
Net interest income 7,587 6,375 7,264
Average interest-earning assets 620,830 541,337 586,347
Net interest spread 1.87% 1.82% 1.84%
Net interest margin 2.46% 2.37% 2.46%
Net fee income rose by HK$1,080 million, or 60.6 per cent.
Net fee income reached HK$2,862 million, representing an increase of 60.6 per cent and 66.9 per cent over the first and
second halves of 2006 respectively.
Investment services expanded significantly, capturing the opportunities provided by the buoyant stock market and favourable
investment environment. Stockbroking and related services income rose by 85.4 per cent to HK$738 million, driven by a 78.4
per cent growth in turnover. Investment funds income (including sales commission and fund management fees) rose by 50.4
per cent to HK$728 million. Sales turnover of investment funds reached a half-year record of HK$32.4 billion, rising 88.6 per
cent over the same period last year. Income from sales of third-party structured products (mainly equity-linked instruments)
rose by HK$217 million to reach HK$249 million. Private banking investment services income increased by 108.1 per cent.
Card services income rose by 19.9 per cent, supported by an increase of 22.3 per cent in cardholder spending. Deposit
services and payment and cash management business also showed good progress, reporting growth in account services fees
and remittances of 19.0 per cent and 21.3 per cent respectively.
Trading income fell by HK$75 million, or 11.4 per cent.
The fall in foreign exchange income of HK$216 million was mainly attributable to two reasons not related to normal foreign
exchange trading. First, an exchange loss of HK$187 million was incurred in the first half of 2007 (HK$38 million in the first

Financial Review (continued)
10
half of 2006) on forward contracts used in “funding swap” activities in the balance sheet management portfolios. Second,
capital funds of the Bank’s Mainland subsidiary, Hang Seng Bank (China) Limited (“HACN”) maintained in US dollars pending
approval to convert into renminbi were recorded at historical rate. The subsequent revaluation loss of such US dollar funds
against the renminbi, amounting to HK$47 million in the first half of 2007, was recognised as a foreign exchange loss.
Income from securities, derivatives and other trading rose significantly by HK$141 million, or 287.8 per cent, attributable
mainly to the 78.8 per cent increase in the turnover of equity-linked structured products for commercial and personal customers
and an improvement in proprietary trading results.
Compared with the second half of 2006, trading income was down HK$87 million, mainly attributable to the exchange loss
on funding swap transactions.
Treasury from time to time employs foreign exchange swaps for its funding activities, which in essence involve swapping a currency
(“original currency”) into another currency (“swap currency”) at the spot exchange rate for short-term placement and simultaneously
entering into a forward exchange contract to convert the funds back to the original currency on maturity of the placement. In accordance
with HKAS39, the exchange difference of the spot and forward contracts is required to be recognised as foreign exchange gain/loss, while
the corresponding interest differential between the original and swap funding is reflected in net interest income.
Net income from financial instrument designated at fair value rose by HK$649 million to HK$686 million, mainly
reflecting the improvement in investment returns on life insurance asset portfolios.
Net earned insurance premiums rose by HK$867 million, or 21.9 per cent.
The successful launch of regular-pay (non-linked) life insurance products in the first half of 2007 helped us attain a favourable
market position.
Net insurance claims incurred and movement in policyholders’ liabilities rose by HK$1,434 million, or 39.1 per
cent.
The growth in liabilities to policyholders, including investment and other reserves, was in line with the growth in long term life
insurance policies in-force.
Analysis of income from wealth management business
Half-year ended Half-year ended Half-year ended
30 June 30 June 31 December
2007 2006 2006

(Figures in HK$m) (restated)
Investment income:
•retail investment funds 728 484 312
•structured investment products 511 235 278
•private banking 337 165 175
•securities broking and related services 738 398 407
•margin trading and others 30 33 32
2,344 1,315 1,204

Insurance income:
•life insurance 943 688 788
•general insurance and others 142 165 121
1,085 853 909

Total 3,429 2,168 2,113
Income from structured investment products includes income reported under net fee income on the sales of third-party structured investment
products. It also includes profit generated from the selling of structured investment products in issue, reported under trading income.
Income from private banking includes income reported under net fee income on investment services and profit generated from selling
of structured investment products in issue, reported under trading income.

11
Wealth management income reached a record HK$3,429 million in the first half of 2007, an increase of 58.2 per cent over a
year earlier. This was contributed by a 78.3 per cent growth in investment services income and 37.1 per cent rise in life
insurance income.
Investment fund sales reached a half-year record of HK$32.4 billion, rising by 88.6 per cent over the same period last year.
The achievement reflected the success of the Hang Seng fund series in the launch of new funds (the Hang Seng Consumer
Sector FlexiPower Fund, the first consumer sector fund authorised in Hong Kong focusing on the Mainland and Hong Kong
markets, and the Hang Seng China B-Share Focus Fund, which is the first retail fund in Hong Kong to focus on China
B-shares) and the good performance of existing funds (particularly the Hang Seng China Equity Fund and the Hang Seng High
Yield Bond Fund). In addition, a wide variety of third-party funds were selected to meet customers’ different investment
objectives. Funds under management (excluding private banking) rose by 8.8 per cent to HK$67.4 billion from the previous
year-end. Investment fund income (including sales commission and management fees) rose by 50.4 per cent to HK$728
million.
The Bank adopted an open architecture model to source and package the most competitive structured products (including
both Hang Seng and third-party products) and offer the best time-to-market to provide the best value for customers. The
success of this approach was reflected in a 28.3 per cent rise in turnover and 117.4 per cent increase in income from
structured profits (mainly equity-linked instruments).
Further investments were made in securities services to enhance the efficiency and capacity of the e-Banking and phone
banking trading platforms to capture business opportunities provided by the buoyant stock market. Leveraging on its large
network, customer base and funding capabilities, the Bank participated actively in initial public offering (“IPO”) activities by
acting as a receiving bank and offered preferential packages to customers for IPO subscriptions. Together with successful
promotional campaigns to acquire new accounts and boost trading activities, securities accounts and trading volume grew by
17.2 per cent and 78.4 per cent respectively year-on-year. Stockbroking and related service income rose by 85.4 per cent to
HK$738 million.
Private banking further strengthened its relationship management team and investment service support. Customer base and
assets under management rose by 8.5 per cent and 20.6 per cent respectively. Its investment services income rose by an
impressive 104.2 per cent.
Life insurance recorded encouraging income growth of 37.1 per cent to reach HK$943 million (analysed in the table below).
Hang Seng ranked first in the market for new regular-pay (non-linked) life insurance premium in the first quarter of 2007.
This unprecedented success is attributable to the offering of a diverse range of retirement solutions – from wealth accumulation
to health protection – to meet customers’ needs of all life stages through an efficient multi-channel distribution network.

Financial Review (continued)
12
General insurance income fell 13.9 per cent to HK$142 million in a competitive market environment.
Half-year ended Half-year ended Half-year ended
30 June 30 June 31 December
(Figures in HK$m) 2007 2006 2006
Life insurance:
• net interest income and fee income 429 294 371
• investment returns on life insurance funds 689 44 866
• net earned insurance premiums 4,676 3,791 3,743
• claims, benefits and surrenders paid (618) (517) (497)
• movement in policyholders’ liabilities (4,445) (3,113) (3,878)
• reinsurers’ share of claims incurred and
movement in policyholders’ liabilities 5 45
• movement in present value of in-force
long-term insurance business 207 185 178
943 688 788

General insurance and others 142 165 121
Total 1,085 853 909
Including premium and investment reserves
Operating expenses rose by HK$576 million, or 24.6 per cent.
Operating expenses rose by HK$576 million, or 24.6 per cent, compared with the first half of 2006. Mainland operations
accounted for an increase of HK$121 million, attributable mainly to the establishment of HACN and the expansion of branch
network and headcount. Excluding Mainland operations, operating expenses rose by 20.3 per cent.
Employee compensation and benefits increased by HK$321 million, or 25.1 per cent, over the same period last year. Of this
amount, HK$277 million was in the form of variable performance-related pay, including sales incentives and bonuses, which
made up 25.3 per cent of total staff costs in the first half of 2007 (10.0 per cent for the first half of 2006). Salaries and other
costs increased by 7.4 per cent, reflecting increased headcount and annual salary increment.
General and administrative expenses were up HK$229 million, or 25.2 per cent. An increase of HK$53 million in rental
expenses was attributable to branches in Hong Kong and on the Mainland as well as additional rental after the disposal of the
Hang Seng Building in May 2006 and the new “Mega Site” back office centre. Marketing and advertising expenses rose by
HK$83 million with the increased promotion of wealth management products and card services and brand building both in
Hong Kong and on the Mainland. The increase of HK$80 million under the heading of ‘Other operating expenses’ included
financial data fees to support securities business growth, professional and other costs associated with the establishment of
HACN and charges by the HSBC Group processing centres due to an increase in business volume.
At 30 June At 30 June At 31 December
Staff numbers by region 2007 2006 2006
Hong Kong 7,724 7,524 7,748
Mainland 843 471 661
Others 58 50 55
Total 8,625 8,045 8,464
Full-time equivalent

13
The number of full-time equivalent staff increased by 580 year-on-year. New staff in Hong Kong were hired to further expand
private banking’s financial advisory team and strengthen the Personal Financial Services and Commercial Banking relationship
management and wealth management teams. Mainland staff increased from 471 to 843, due to the establishment of HACN
and branch network expansion.
The cost efficiency ratio for the first half of 2007 was 26.6 per cent, compared with 26.8 per cent for the same period last
year.
Operating profit
Operating profit was up HK$1,420 million, or 22.4 per cent, at HK$7,773 million, after accounting for loan impairment
charges and other credit provisions of HK$280 million, compared with HK$34 million in the first half of 2006 which
benefited from a substantial recovery from a commercial banking account.
Loan impairment charges and other credit risk provisions increased by HK$246 million, or 723.5 per cent, to
HK$280 million.
Half-year ended Half-year ended Half-year ended
30 June 30 June 31 December
(Figures in HK$m) 2007 2006 2006
Loan impairment (charges)/releases
• individually assessed (137) 29 (136)
• collectively assessed (143) (63) (82)
(280) (34) (218)
of which:
• new and additional (349) (165) (258)
• releases 40 97 9
• recoveries 29 34 31
(280) (34) (218)
Other provisions – – (12)
Loan impairment charges and other
credit risk provisions (280) (34) (230)
Individually assessed provisions recorded a net charge of HK$137 million compared with a net release of HK$29 million for
the same period last year, due mainly to higher new charges and lower releases for corporate and commercial banking
customers. Of the collectively assessed charges, HK$101 million was made on card and personal loan portfolios, a rise of 71.2
per cent over same period last year. A charge of HK$42 million was made on advances not individually identified as impaired,
compared with a charge of HK$4 million made in the first half of 2006. This reflects an update of the historical loss rates used
for the first half of 2007.

Financial Review (continued)
14
Total loan impairment allowances as a percentage of gross advances to customers are as follows:
At 30 June At 30 June At 31 December
2007 2006 2006

% %%
Loan impairment allowances
• individually assessed 0.13 0.14 0.15
• collectively assessed 0.18 0.19 0.18
Total loan impairment allowances 0.31 0.33 0.33
Attributable profit
Profit before tax was up HK$2,705 million, or 36.0 per cent, at HK$10,218 million, in part reflecting a gain of HK$1,465
million following the listing of our strategic mainland China partner Industrial Bank Co., Ltd (“Industrial Bank”) and an
increase of HK$172 million in share of profits from associates, mainly contributed by Industrial Bank. These were partly
offset by decreases of HK$300 million in profit on disposal of fixed assets and financial investments and HK$52 million
in net surplus on property revaluation.
Profit on disposal of fixed assets and financial investments amounted to HK$274 million, a decrease of 52.3 per
cent compared with the first half of 2006.
Profit on disposal of equity investments increased by 96.8 per cent to HK$248 million. On the other hand, profit on disposal
of properties fell to HK$26 million, compared with HK$448 million in the same period last year which recorded the disposal
of the Hang Seng Bank Building at 77 Des Voeux Road Central.
Net surplus on property revaluation fell by 10.4 per cent to HK$266 million.
Half-year ended Half-year ended Half-year ended
30 June 30 June 31 December
(Figures in HK$m) 2007 2006 2006
Net surplus on property revaluation
• bank premises 17 13 4
• investment properties 154 305 (1)
• properties held for sale 95 ––
266 318 3

A revaluation of Hang Seng’s premises and investment properties in Hong Kong was performed in June 2007 to reflect
property market movements in the first half of the year. The Group’s premises and investment properties were revalued by
DTZ Debenham Tie Leung Limited, an independent professional valuer, and carried out by qualified persons who are members
of the Hong Kong Institute of Surveyors. The basis of the valuation of premises was open market value for existing use and
the basis of valuation for investment properties was open market value. The revaluation surplus for Group premises amounted
to HK$281 million of which HK$17 million was a reversal of revaluation deficits previously charged to the income statement.
The balance of HK$264 million was credited to the premises revaluation reserve. Revaluation gains on investment properties
of HK$154 million were recognised through the income statement. The related deferred tax provisions for Group premises
and investment properties were HK$49 million and HK$27 million respectively.
The revaluation exercise also covered investment properties reclassified as properties held for sale. In accordance with
HKFRS 5, the revaluation gain of HK$95 million was recognised through income statement.

15
Customer Group Performance
The table below sets out the profit before tax contributed by the customer groups for the periods stated.
Personal
Financial Commercial Corporate
(Figures in HK$m) Services Banking Banking Treasury Other Total
Half-year ended 30 June 2007
Profit before tax 5,278 1,285 192 571 2,892 10,218
Share of profit before tax 51.7% 12.6% 1.8% 5.6% 28.3% 100.0%
Half-year ended 30 June 2006
Profit before tax 3,897 1,096 271 506 1,743 7,513
Share of profit before tax 51.9% 14.6% 3.6% 6.7% 23.2% 100.0%
Half-year ended 31 December 2006
Profit before tax 3,833 1,166 286 545 1,052 6,882
Share of profit before tax 55.7% 16.9% 4.2% 7.9% 15.3% 100.0%
Personal Financial Services (“PFS”) reported a growth of 35.4 per cent in profit before tax to HK$5,278 million and
contributed 51.7 per cent to the Group’s total profit before tax. Operating profit excluding loan impairment charges rose by
35.9 per cent, reflecting strong growth in wealth management, private banking, card and personal lending businesses.
Non-interest income grew by 56.3 per cent, driven primarily by the continued success of PFS’s wealth management business,
which reported the following record achievements:
• Investment funds: record sales with a significant 88.6 per cent growth over the first half of 2006;
• Stock trading: record turnover with growth of 78.4 per cent and increase in customer base (17.2 per cent growth year-on-
year);
• Equity-linked structured instruments: record turnover with growth of 234.4 per cent; and
• Life insurance: number one ranking in terms of new regular-pay (non-linked) life insurance premiums for the first quarter
of 2007. This achievement was attributable to the offering of a diverse range of retirement solutions – from wealth
accumulation to health protection – to meet customers’ needs of all life stages.
Private banking sustained its outstanding performance trends with total operating income up by 60.7 per cent. Profit before
tax rose by 62.4 per cent to HK$459 million.
Net interest income rose by 16.7 per cent, contributed mainly by the 7.8 per cent growth in average customer deposits and
the widening of deposit spreads. Higher growth was recorded in savings accounts, reflecting a customer preference for
maintaining liquidity for investment activities.
The impressive year-on-year growth in card advances and personal lending of 29.3 per cent and 48.8 per cent respectively
offset the contraction in the Government Home Mortgage Scheme (“GHOS”) mortgage portfolio. Amid intense market
competition, residential mortgages fell slightly by 0.8 per cent with continued pressure on loan margins. The Bank maintained
its position as one of the market leaders by promoting one-stop e-mortgage services as a key area of differentiation.

Financial Review (continued)
16
A series of promotional activities and strong consumer market sentiment helped card business grow steadily in the first half of
2007. Cards in issue reached 1.44 million, up from 1.40 million at the end of 2006. Card spending increased by 22.3 per cent.
Commercial Banking (“CMB”) achieved an increase of 15.3 per cent in operating profit excluding loan impairment charges,
driven by strong growth in both net interest income and net fee income. Profit before tax rose by 17.2 per cent to HK$1,285
million, contributing 12.6 per cent of the Group’s total.
Net interest income recorded good growth of 21.6 per cent. Average customer advances rose by 22.7 per cent over the first
half of 2006 as a result of balanced growth in trade and factoring, advances to the manufacturing and wholesale and retail
sectors, and IPO-related financing.
Corporate wealth management income contributed 9.0 per cent of CMB’s total operating income in the first half of 2007, up
from 7.9 per cent in 2006. In particular, investment and treasury income achieved robust growth of 73.2 per cent.
CMB continued its strategy of providing customer-centric solutions to retailers. Net fee income from card merchant-acquiring
business achieved strong growth of 40.9 per cent. To enhance our competitive position, Octopus merchant services were
launched in June 2007 to help SME retailers improve their cash management.
In addition to corporate wealth management and card merchant-acquiring business, CMB also achieved satisfactory growth
in trade and remittances services income. Net fees and commissions grew by 20.8 per cent.
Average customer deposits increased by 19.5 per cent, driven primarily by customer segmentation initiatives that improved
the management of non-borrowing SME customers.
CMB business continued to grow rapidly on the Mainland, with intensified collaboration between the Hong Kong and
Mainland teams. Net interest income on the Mainland grew by 144.9 per cent in the first half of 2007. In early July, the Bank
became the first foreign bank to provide renminbi services to corporate customers in Dongguan, further strengthening its
competitive position in the Pearl River Delta region.
Business e-Banking enjoyed strong growth. At 30 June 2007, over 44,000 customers had registered for Business e-Banking
services, a year-on-year increase of 34.5 per cent. The number of online business banking transactions grew by 46.2 per cent.
Corporate Banking (“CIB”) achieved an increase of 16.0 per cent in operating profit excluding loan impairment charges,
underpinned by satisfactory growth of 15.7 per cent in net interest income and 35.0 per cent in net fee income. Average
customer deposits rose by 28.9 per cent and deposit spreads widened. Average customer advances increased by 2.3 per cent,
mainly in lending to property investment, securities and information technology companies.
Profit before tax fell by HK$79 million to HK$192 million, affected by an increase in loan impairment charges.
Strong liquidity in Hong Kong continued to exert pressure on corporate loan margins. CIB remained focused on better yield
transactions and continued to target business sectors such as investment holding companies and securities firms. CIB was
active in financing Mainland projects of Hong Kong-based corporates and continued to expand its Mainland customer base.
Encouraging progress with income diversification saw solid growth in trade services, while credit facilities fees increased on
the back of an active refinancing market. Overall, net fee income increased by 35.0 per cent.
Treasury (“TRY”) reported a 2.7 per cent growth in operating profit excluding loan impairment charges. Profit before tax,
taking into account the increase in share of profits from associates, rose by 12.8 per cent to HK$571 million and contributed
5.6 per cent to the Group’s total profit before tax.
Balance sheet management portfolios reversed their downward trend and recorded growth of HK$191 million, or 88.4 per
cent, in net interest income. Excluding the HK$149 million favourable impact of “funding swap” activities, net interest
income rose by HK$42 million, or 23.6 per cent. With the growth in portfolios and gradual re-pricing of lower yield investments,
Treasury is now better positioned to capture yield enhancement opportunities and deliver profit growth.

17
Trading income fell by HK$170 million, or 51.1 per cent, due mainly to the fall of HK$218 million in foreign exchange profit.
Apart from lower foreign exchange trading profit, the bulk of the decline came from the “funding swap” activities in the
balance sheet management portfolios which were reported as a loss of HK$187 million in the first half of 2007 (loss of HK$38
million in the first half of 2006). Securities and other derivatives trading, including the provision of structured products to
personal and corporate customers, recorded satisfactory growth.
Mainland Business
The opening of HACN on 28 May 2007 marked a new era in the Bank’s Mainland business. Headquartered in Shanghai,
HACN has a network of 17 branches and sub-branches with three new sub-branches (two in Shanghai and one in Guangzhou)
opened since the beginning of the year. The Bank has a branch in Shenzhen for foreign currency wholesale business and a
representative office in Xiamen.
Benefiting from continuing strong economic growth on the Mainland, customer advances and deposits recorded impressive
growth of 21.3 per cent and 42.7 per cent respectively over the end of 2006. Year-on-year, advances and deposits were up
50.4 per cent and 93.9 per cent respectively. Total operating income rose by 86.0 per cent to HK$225 million. Profit before
tax was down HK$40 million, affected by the cost of establishing HACN, an increase in loan impairment charges and the
exchange loss of capital funds maintained in US dollars upon revaluation against the renminbi.
By customer group, Mainland PFS continued to focus on the Prestige Banking segment and the provision of wealth management
services. CMB and CIB teams further stepped up their efforts to join-up with the Bank’s Hong Kong teams to serve customers’
business needs on the Mainland and in Hong Kong. TRY continued to manage the funding positions of the branches and
develop structured investment products to meet customers’ needs.
Including the Bank’s share of profit from Industrial Bank (but excluding the gain on dilution of investment), Mainland business
contributed 5.9 per cent of total profit before tax, compared with 4.3 per cent in the first half of 2006.
Economic Profit
Economic profit is calculated from post-tax profit, adjusted for any surplus/deficit arising from property revaluation and
depreciation attributable to the revaluation surplus, and takes into account the cost of capital invested by the Bank’s shareholders.
For the first half of 2007, economic profit was HK$6,206 million, an increase of HK$2,381 million, or 62.2 per cent, compared
with same period last year. Post-tax profit, adjusted for the property revaluation surplus net of deferred tax and depreciation
attributable to the revaluation, rose by HK$2,719 million. Cost of capital rose by HK$338 million, in line with the growth in
invested capital with the accumulation of retained profits.
Half-year ended Half-year ended Half-year ended
30 June 2007 30 June 2006 31 December 2006
HK$m % HK$m % HK$m %
Average invested capital 43,424 37,485 40,439
Return on invested capital 8,682 40.3 5,963 32.1 5,877 28.8
Cost of capital (2,476) (11.5) (2,138) (11.5) (2,359) (11.6)
Economic profit 6,206 28.8 3,825 20.6 3,518 17.2
Return on invested capital is based on post-tax profit excluding any surplus/deficit arising from property revaluation and depreciation
attributable to the revaluation surplus.

Financial Review (continued)
18
Balance Sheet
Total assets grew by HK$72.3 billion, or 10.8 per cent, during the first half of 2007 to HK$741.3 billion. Customer advances
rose by HK$31.6 billion, or 11.3 per cent, including HK$26.9 billion in financing customers for subscription of shares in IPOs.
Encouraging growth was recorded in lending on the Mainland, trade finance, card advances and personal loans. Customer
deposits rose by 3.4 per cent, mainly in current and savings accounts. At 30 June 2007, the advances-to-deposits ratio was
55.7 per cent, compared with 51.7 per cent and 52.8 per cent at the end of December 2006 and June 2006 respectively.
Advances to customers
Gross advances at 30 June 2007 reached HK$312.0 billion, representing growth of 11.3 per cent over 31 December 2006
and 16.7 per cent year-on-year. The amount included IPO-related financing of HK$26.9 billion. During the first half of 2007,
the Bank acted as receiving bank for eight IPOs and provided over HK$209.3 billion in IPO-related financing to brokers and
corporate and private investors.
Excluding IPO-related financing, gross advances grew by 1.7 per cent and 6.6 per cent over 31 December 2006 and 30 June
2006 respectively.
New financing for large CIB customers was active, reflected in good growth in lending to the property investment, stockbrokers
and information technology sectors. However, large repayments of existing loans in the wholesale and retail trade and the
“Other” sectors curtailed the growth of the overall CIB loan portfolio.
Growth in CMB advances was mainly recorded in the manufacturing, wholesale and retail trade sectors and in the 11.7 per
cent increase in trade finance, these being the target segments of CMB.
Residential mortgages fell marginally by 0.8 per cent amid severe market competition. The Bank did not compete on pricing
but defended its market position by providing preferential offers via its e-channel. Mortgages under the GHOS fell at a slower
pace of 4.7 per cent in the first half of 2007 (compared with a fall of 6.5 per cent during the second half of 2006) as there
were new loans drawdown following the Housing Authority’s re-launch of the sale of GHOS flats earlier this year.
Sustained strong consumer spending saw card advances rise 3.8 per cent compared with the end of 2006 and 29.3 per cent
year-on-year. Personal lending grew by 18.6 per cent compared with 31 December 2006 and 48.8 per cent year-on-year,
riding on the Bank’s successful promotion campaigns.
Loans for use outside Hong Kong increased by 14.1 per cent for the first six months of 2007 to reach HK$25.3 billion. Year-
on-year, a growth of 42.0 per cent was recorded. This was attributable largely to the expansion of the Mainland loan
portfolio - which grew by 21.3 per cent compared with the end of last year and 50.4 per cent year-on-year - to reach
HK$19.2 billion at 30 June 2007. Strong growth was recorded in corporate lending, driven by renminbi loans. Trade finance
rose significantly by 42.2 per cent, leveraging on the Bank’s experience, service quality and strong customer base in the Pearl
River Delta region.
Customer deposits
Customer deposits and certificates of deposit and other debt securities in issue stood at HK$558.4 billion at 30 June 2007, a
rise of 3.4 per cent over the end of 2006 and 10.6 per cent year-on-year. Higher growth was recorded in savings and current
account balances, reflecting customer preference for liquidity in an active investment market.

19
RISK MANAGEMENT

Risk management is an integral part of banking business. The Group has put in place an effective risk management framework
to ensure risks undertaken are properly managed. Operating in the financial services industry, the Group faces a wide spectrum
of risks, the most important types are being credit, liquidity, market, operational and reputational risks. The Group’s risk
management framework includes the establishment of policies and procedures to identify and analyse risks and to set
appropriate risk control limits. The risk management policies and major control limits are approved by the Board of Directors.
Risk limits are monitored and controlled continually by dedicated departments by means of reliable and up-to-date management
information systems. The management of various types of risks is well coordinated at the level of the Bank’s Board and
various management committees, including the Executive Committee, Asset and Liability Management Committee (“ALCO”)
and Credit Committee.
Credit Risk
Credit risk is the risk that financial loss arises from the failure of a customer or counterparty to meet its obligations under a
contract. It arises principally from lending, trade finance, treasury and leasing businesses. The Group has dedicated standards,
policies and procedures in place to control and monitor the risk from all such activities.
The Credit Risk Management (“CRM”) function is mandated to provide centralised management of credit risk through:
• formulating credit policies on approval process, post-disbursement monitoring, recovery process and large exposures;
• issuing guidelines on lending to specified market sectors, industries and products; the acceptability of specific classes of
collateral or risk mitigation and valuation parameters for collateral;
• undertaking an independent review and objective assessment of credit risk for all commercial non-bank credit facilities in
excess of a designated amount prior to the facilities being committed to customers;
• controlling exposures to selected industries, counterparties, countries and portfolio types by setting limits;
• maintaining and developing credit risk rating/facility grading processes to categorise exposures and facilitate focused
management;
• reporting to senior executives and various committees on aspects of the Group loan portfolio;
• managing and directing credit-related systems initiatives; and
• providing advice and guidance to business units on various credit-related issues.
The Group undertakes ongoing credit analysis and monitoring at several levels. Special attention is paid to problem loans.
Loan impairment allowances are made promptly where necessary and are consistent with established guidelines. Recovery
units are established by the Group to provide customers with intensive support in order to maximise recoveries of doubtful
debts. Management regularly performs an assessment of the adequacy of the established impairment provisions by conducting
a detailed review of the loan portfolio, comparing performance and delinquency statistics against historical trends and
undertaking an assessment of current economic conditions.
Currently, the Group’s risk rating framework consists of seven facility grades, taking into account the risk of default and the
availability of security or other credit risk mitigation. A more sophisticated risk rating framework on counterparty credit risk
based on default probability and loss estimates and comprising up to 22 categories, is being progressively implemented
across the Group on a parallel basis. The rating methodology of this framework is based upon a wide range of financial
analytics. The new approach will allow a more granular analysis of risk and trends.

Financial Review (continued)
20
The Group has implemented guidelines on the acceptability of specific classes of collateral or credit risk mitigation, and
determined the valuation parameters. Such parameters are established prudently and are reviewed regularly in light of the
changing market environment and empirical evidence. While collateral is an important mitigant to credit risk, it is the Group’s
policy to establish that loans are within the customer’s capacity to repay rather than to rely excessively on security. Facilities
may be granted on an unsecured basis depending on the customer’s standing and the type of product. The principal collateral
types are as follows:
• in the personal sector, charges over properties, securities, investment funds and deposits;
• in the commercial and industrial sector, charges over business assets such as properties, stock, debtors, investment funds,
deposits and machinery; and
• in the commercial real estate sector, charges over the properties being financed.
Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument.
Debt securities, treasury and other eligible bills are generally unsecured with the exception of asset-backed securities and
similar instruments, which are secured by pools of financial assets.
Liquidity Risk
Liquidity management is essential to ensure the Group has the ability to meet its obligations as they fall due. It is the Group’s
policy to maintain a strong liquidity position by properly managing the liquidity structure of its assets, liabilities and commitments
so that cash flows are appropriately balanced and all funding obligations are comfortably met.
The Group has established policies and procedures to monitor and control its liquidity position on a daily basis by adopting a
cash flow management approach. The approach seeks to forecast committed cash inflows and outflows of the business and
results in a daily net funding requirement which indicates the refinancing needs for any given day within the scope of the
forecast conditions. Stress scenarios analysis for normal business conditions, an institution-specific crisis and a general market
crisis are also conducted on a regular basis. The Group always maintains a stock of high-quality liquid assets to ensure the
availability of sufficient cash flow to meet its financial commitments, including customer deposits on maturity and undrawn
facilities, over a specified future period. The liquidity management process is monitored by the ALCO and is reported to the
Executive Committee and the Board of Directors.
Market Risk Management
Market risk is the risk that foreign exchange rates, interest rates, equity and commodity prices, and indices will move and
result in profits or losses for the Group. The objective of the Group’s market risk management is to manage and control
market risk exposures in order to optimise return on risk while maintaining a market profile consistent with the Group’s status
as a premier provider of financial products and services.
The Group separates exposures to market risk into either trading or non-trading portfolios. Trading portfolios include those
positions arising from market-making, proprietary position-taking and other marked-to-market positions so designated.
Non-trading portfolios primarily arise from the effective interest rate management of the Group’s retail and commercial
banking assets and liabilities.
The management of market risk is principally undertaken in Treasury using risk limits approved by the Board of Directors.
Limits are set for each portfolio, product and risk type, with market liquidity being a principal factor in determining the level
of limits set. The Group has dedicated standards, policies and procedures in place to control and monitor the market risk. An
independent market risk control function is responsible for measuring market risk exposures, monitoring and reporting these
exposures against the prescribed limits on a daily basis. The market risks which arise on each business are assessed and
transferred to either Treasury for management, or to separate books managed under the supervision of ALCO.

21
One of the principal tools used by the Group to monitor and limit market risk exposure is VAR. The Group has obtained
approval from the HKMA to use its VAR model for calculation of market risk capital charge.
VAR is a technique which estimates the potential losses that could occur on risk positions taken due to movements in market
rates and prices over a specified time horizon and to a given level of confidence. In line with HSBC Group policy, the Group
has adopted historical simulation (“HS”) basis for VAR calculation. HS uses scenarios derived from historical market rates and
takes account of the relationships between different markets and rates, for example, interest rates and foreign exchange
rates. Movements in market prices are calculated by reference to market data from the past two years. The assumed holding
period is a one-day period with a 99 per cent level of confidence, reflecting the way the risk positions are managed.
The Group’s VAR, both trading and non-trading, for all interest rate risk and foreign exchange risk positions and on individual
risk portfolios during the first halves of 2007 and 2006 are shown in the table below.
Value at risk
Minimum Maximum
At 30 June during during Average
2007 the period the period for the period
VAR for all interest rate risk and
foreign exchange risk 57 39 60 50
VAR for foreign exchange
risk (trading) 8192
VAR for interest rate risk
• trading 5396
• non-trading 59 44 64 55
Minimum Maximum
At 30 June during during Average
2006 the period the period for the period
VAR for all interest rate risk and
foreign exchange risk 47 47 119 86
VAR for foreign exchange
risk (trading) 5 3 16 6
VAR for interest rate risk
• trading 15 3 15 7
• non-trading 51 51 123 91
The average daily revenue earned from market risk-related treasury activities for the first half of 2007, including non-trading
book net interest income and funding related to trading positions, was HK$5 million (HK$5 million for the first half of 2006).
The standard deviation of these daily revenues was HK$3 million (HK$3 million for the first half of 2006).
An analysis of the frequency distribution of daily revenue shows that out of 121 trading days for the first half of 2007, losses
were recorded on 3 days (4 days for the first half of 2006). The maximum daily loss was HK$6 million (HK$2 million for the
first half of 2006). The most frequent result was a daily revenue of between HK$4 million and HK$8 million, with 69 occurrences.
The highest daily revenue was HK$12 million (HK$12 million for the first half of 2006).

Financial Review (continued)
22
Daily distribution of market risk revenue for the first half of 2007
Daily distribution of market risk revenue for the first half of 2006
Interest rate risks comprise those originating from Treasury activities, both trading and non-trading portfolios, which include
structural interest rate exposures. Treasury manages interest rate risks within the limits approved by the Board of Directors
and under the monitoring of ALCO.
The Group’s foreign exchange exposures mainly comprise foreign exchange dealing by Treasury and currency exposures
originated by its banking business. The latter are transferred to Treasury where they are centrally managed within foreign
exchange position limits approved by the Board of Directors. Structural foreign exchange positions arising from capital
investments in associate, subsidiaries and branches outside Hong Kong, mainly in US dollar and renminbi as set out in note 45
to the interim financial statements, are managed by ALCO.

23
Equities exposure
The Group’s equities exposure for the first half of 2007 was mainly in long-term equity investments which are reported as
“Financial investments” set out in note 25 to the interim financial statements. Equities held for trading purpose are included
under “Trading assets” set out in note 21 to the interim financial statements. These are subject to trading limit and risk
management control procedures and other market risk regimes.
Operational Risk
Operational risk is the risk of loss arising through fraud, unauthorised activities, error, omission, inefficiency, system failure or
from external events. It is inherent to every business organisation and covers a wide spectrum of issues. The Group manages
its operational risk through a controls-based environment in which the processes and controls are documented, authorisation
is independent and transactions are reconciled and monitored. This is supported by periodic independent review of the
internal control systems by internal audit. The operational risk management framework comprises assignment of responsibilities
at senior management level, assessment of risk factors inherent in each business and operations units, information systems to
record operational losses and analysis of loss events. Operational risk is mitigated by adequate insurance coverage on assets
and business losses. To reduce the impact and interruptions to business activities caused by system failure or natural disaster,
back-up systems and contingency business resumption plans are in place for all business and critical operations functions.
Operational risk management is coordinated by the Chief Operating Officer and monitored by the Operational Risk Management
Committee.
Reputational Risk
Reputational risks can arise from social, ethical or environmental issues, or as a consequence of operational risk events.
Standards are set and policies and procedures are established in all areas of reputational risk and are communicated to staff
at all levels. These include treating customers fairly, conflicts of interest, money laundering deterrence, environmental impacts
and anti-corruption measures. The reputation downside to the Group is fully appraised before any strategic decision is taken.

CONSOLIDATED INCOME STATEMENT
unaudited
24
Half-year Half-year Half-year
ended ended ended
30 June 30 June 31 December
2007 2006 2006

(Expressed in millions of Hong Kong dollars) note (restated)
Interest income 4 16,318 13,654 15,608
Interest expense 5 (9,622) (8,113) (9,455)
Net interest income 6,696 5,541 6,153
Fee income 3,163 2,035 2,039
Fee expense (301) (253) (324)
Net fee income 6 2,862 1,782 1,715
Trading income 7 584 659 671
Net income from financial instruments
designated at fair value 8 686 37 862
Dividend income 9 26 31 16
Net earned insurance premiums 4,821 3,954 3,892
Other operating income 10 397 392 453
Total operating income 16,072 12,396 13,762
Net insurance claims incurred and movement
in policyholder liabilities (5,105) (3,671) (4,406)
Net operating income before loan impairment charges
and other credit risk provisions 10,967 8,725 9,356
Loan impairment charges and other credit risk provisions 11 (280) (34) (230)
Net operating income 10,687 8,691 9,126
Employee compensation and benefits (1,598) (1,277) (1,417)
General and administrative expenses (1,136) (907) (1,307)
Depreciation of premises, plant and equipment (169) (150) (173)
Amortisation of intangible assets (11) (4) (6)
Total operating expenses 12 (2,914) (2,338) (2,903)
Operating profit 7,773 6,353 6,223
Profit on disposal of fixed assets and financial investments 13 274 574 269
Gain on dilution of investment in associate 1,465 ––
Net surplus on property revaluation 266 318 3
Share of profits from associates 440 268 387
Profit before tax 10,218 7,513 6,882
Tax expenses 14 (1,150) (1,202) (847)
Profit for the period 9,068 6,311 6,035
Profit attributable to shareholders 8,867 6,190 5,848
Profit attributable to minority interests 201 121 187
9,068 6,311 6,035

Dividends 16 4,206 4,206 5,736
(Figures in HK$)
Earnings per share 15 4.64 3.24 3.06
Dividends per share 16 2.20 2.20 3.00
The notes on pages 28 to 71 form part of this interim financial report.

CONSOLIDATED BALANCE SHEET
unaudited
25
At 30 June At 30 June At 31 December
(Expressed in millions of Hong Kong dollars) note 2007 2006 2006
ASSETS

Cash and balances with banks and other financial institutions 19 12,921 13,763 9,390
Placings with and advances to banks and
other financial institutions 20 94,485 82,563 99,705
Trading assets 21 9,848 14,543 12,467
Financial assets designated at fair value 22 9,827 6,429 8,280
Derivative financial instruments 23 2,348 2,161 1,887
Advances to customers 24 310,972 266,505 279,353
Financial investments 25 251,191 211,955 227,710
Investments in associates 26 5,279 3,267 3,488
Investment properties 27 2,457 3,161 2,732
Premises, plant and equipment 28 6,342 6,553 6,516
Interest in leasehold land held for own use
under operating lease 29 572 587 580
Intangible assets 30 2,347 1,857 2,070
Other assets 31 32,733 14,945 14,886
741,322 628,289 669,064
LIABILITIES

Current, savings and other deposit accounts 32 512,450 448,097 482,821
Deposits from banks 57,834 22,131 17,950
Trading liabilities 33 44,294 61,630 60,093
Financial liabilities designated at fair value 1,473 1,494 1,562
Derivative financial instruments 23 2,118 2,256 1,531
Certificates of deposit and other debt securities in issue 34 7,282 8,312 7,595
Other liabilities 35 22,123 10,821 16,123
Liabilities to customers under insurance contracts 27,942 18,877 22,975
Deferred tax and current tax liabilities 3,485 2,668 2,716
Subordinated liabilities 36 9,373 7,005 7,000
688,374 583,291 620,366
CAPITAL RESOURCES

Minority interests 1,917 1,280 1,717
Share capital 9,559 9,559 9,559
Retained profits 32,706 28,627 29,044
Other reserves 6,663 3,429 4,745
Proposed dividends 2,103 2,103 3,633
Shareholders’ funds 37 51,031 43,718 46,981
52,948 44,998 48,698
741,322 628,289 669,064

The notes on pages 28 to 71 form part of this interim financial report.

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
unaudited
26
Half-year Half-year Half-year
ended ended ended
30 June 30 June 31 December
(Expressed in millions of Hong Kong dollars) 2007 2006 2006
Unrealised surplus on revaluation of premises, net of tax 218 469 50
Tax on realisation of revaluation surplus on disposal of premises 10 97 9
Available-for-sale investments reserve, net of tax:
• fair value changes taken to equity 271 (80) 1,312
• fair value changes transferred to income statement
• on impairment – – 12
• on hedged items 73 255 (234)
• on disposal (247) (121) (204)
Cash flow hedges reserve, net of tax:
• fair value changes taken to equity (127) (116) (63)
• fair value changes transferred to income statement 141 67 375
Actuarial gains on defined benefit plans, net of tax 369 2 216
Exchange differences on translation of financial statements
of overseas branches, subsidiaries and associates 180 60 124
Net income recognised directly in equity 888 633 1,597
Profit for the period 9,068 6,311 6,035
Total recognised income and expense for the period 9,956 6,944 7,632
Attributable to shareholders 9,755 6,823 7,445
Attributable to minority interests 201 121 187
9,956 6,944 7,632

CONSOLIDATED CASH FLOW STATEMENT
unaudited
27
Half-year Half-year
ended ended
30 June 30 June
(Expressed in millions of Hong Kong dollars) note 2007 2006
Net cash inflow from operating activities 40(a) 12,376 38,080
Cash flows from investing activities
Dividends received from associates 195 20
Purchase of available-for-sale investments (47,529) (60,007)
Purchase of held-to-maturity debt securities (420) (216)
Proceeds from sale or redemption of available-for-sale investments 33,895 34,844
Proceeds from redemption of held-to-maturity debt securities 33 28
Purchase of fixed assets and intangible assets (218) (143)
Proceeds from sale of fixed assets and assets held for sale 212 2,599
Interest received from available-for-sale investments 4,691 2,408
Dividends received from available-for-sale investments 10 31
Net cash outflow from investing activities (9,131) (20,436)
Cash flows from financing activities
Dividends paid (5,736) (5,736)
Interest paid for subordinated liabilities (212) (108)
Proceeds from subordinated liabilities 2,342 3,495
Net cash outflow from financing activities (3,606) (2,349)
(Decrease)/increase in cash and cash equivalents (361) 15,295
Cash and cash equivalents at 1 January 90,275 65,513
Effect of foreign exchange rate changes 1,197 54
Cash and cash equivalents at 30 June 40(b) 91,111 80,862
The notes on pages 28 to 71 form part of this interim financial report.

NOTES TO THE FINANCIAL STATEMENTS
28
(Figures expressed in millions of Hong Kong dollars unless otherwise indicated)
1 Basis of preparation
This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing
the Listing of Securities on
Scope of review
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of interim
financial information performed by the independent auditor of the entity” issued by the Hong Kong Institute of Certified
Public Accountants. A review of the interim financial report consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30
June 2007 is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 “Interim financial
reporting”.
KPMG

Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
30 July 2007

ADDITIONAL INFORMATION
73
The code for securities transactions by Directors
The Bank has adopted a Code for Securities Transactions by Directors on terms no less exacting than the required standards
set out in the Model Code for Securities Transactions by Directors of Listed Issuers (set out in Appendix 10 to the Rules
Governing the Listing of Securities on Specific enquiries have
been made with all Directors (including those who have ceased to be Directors or who have become Directors during the first
six months of 2006) who have confirmed that they complied with the Bank’s Code for Securities Transactions by Directors at
all the applicable times for the period from 1 January 2007 to 30 June 2007 (both dates inclusive).
Directors’ and Alternate Chief Executives’ interests
As at 30 June 2007, the interests of the Directors and Alternate Chief Executives in the shares, underlying shares of equity
derivatives and debentures of the Bank and its associated corporations (all within the meaning of Part XV of the Securities
and Futures Ordinance (“SFO”)) disclosed in accordance with the Listing Rules were detailed below.
Personal Family Corporate Total
Interests Interests Interests Interests as
(held as (Interests of (Interests of % of the
beneficial spouse or child controlled Other Total relevant issued
owner) under 18) corporation) Interests Interests share capital
Number of Ordinary Shares
of HK$5 each in the Bank
Directors:
Mr Raymond C F Or 50,000 –––50,000 0.00
Mr John C C Chan –––1,000
(1)
1,000 0.00

Mr Patrick K W Chan – 1,000 ––1,000 0.00
Mr Joseph C Y Poon 5,000 10,000 15,000 0.00
Number of Ordinary Shares
of US$0.50 each in HSBC
Holdings plc
Directors:
Mr Raymond C F Or 187,414 37,934 – 197,372
(6)
422,720 0.00

Mr Edgar D Ancona 225,027 ––560,913
(6)
785,940 0.01

Mr John C C Chan 14,283 3,000
(1)
17,283 0.00

Mr Patrick K W Chan 2,458 5,162 – 52,017
(6)
59,637 0.00

Mr Jenkin Hui 10,906 24,342 1,208,413
(2)
– 1,243,661 0.01
Dr Eric K C Li – 18,132 79,622
(3)
– 97,754 0.00
Mr Joseph C Y Poon 27,468
(4)
61,538 – 65,844
(6)
154,850 0.00

Mr Peter T S Wong 122,298 21,497 – 81,159
(6)
224,954 0.00

Alternate Chief Executives:
Mr William W Leung 11,021 ––47,148
(6)
58,169 0.00

Mrs Dorothy K Y P Sit 11,998
(5)
728 – 47,546
(6)
60,272 0.00

Notes:
(1) 1,000 shares in the Bank and 3,000 shares in HSBC Holdings plc were held by a trust of which Mr and Mrs John C C Chan were beneficiaries.
(2) Mr Jenkin Hui was entitled to fully control the voting power at general meetings of Parc Palais Incorporated, a private company, which
beneficially held all of those shares referred to above as his corporate interests.
(3) Dr Eric K C Li was entitled to control no less than one-third of the voting power at general meetings of a private company which
beneficially held all of those shares referred to above as his corporate interests.

Additional Information (continued)
74
(4) 22,599 shares were jointly held by Mr and Mrs Joseph C Y Poon.
(5) 5,680 shares were jointly held by Mrs Dorothy K Y P Sit and her husband.
(6) These represent interests in (i) options granted to Directors and Alternate Chief Executives under the HSBC Share Option Plans/HSBC
Finance 1996 Long-Term Executive Incentive Compensation Plan to acquire ordinary shares of US$0.50 each in HSBC Holdings plc; and
(ii) conditional awards of shares under the HSBC Holdings plc Restricted Share Plan/HSBC Share Plans made in favour of Directors and
Alternate Chief Executives and held by various trusts for ordinary shares of US$0.50 each in HSBC Holdings plc, as set against their
respective names below:
Conditional awards of shares under
Options the HSBC Holdings plc Restricted
(please refer to the Share Plan/HSBC Share Plans
options table below (please refer to the awards table
for details) below for further information) Total
Directors:
Mr Raymond C F Or 2,504 194,868 197,372
Mr Edgar D Ancona 459,113 101,800 560,913
Mr Patrick K W Chan 26,000 26,017 52,017
Mr Joseph C Y Poon 28,454 37,390 65,844
Mr Peter T S Wong – 81,159 81,159
Alternate Chief Executives:
Mr William W Leung 13,322 33,826 47,148
Mrs Dorothy K Y P Sit 5,435 42,111 47,546
Options
At 30 June 2007, the undermentioned Directors and Alternate Chief Executives held unlisted physically settled options to
acquire the number of ordinary shares of US$0.50 each in HSBC Holdings plc set against their respective names. These
options were granted for nil consideration by HSBC Holdings plc.
Options exercised
Options during the first
held at half of the year Exercise
30 June (ordinary shares price Date Exercisable Exercisable
2007 of US$0.50 each) per share granted from until
Directors:
Mr Raymond C F Or 1,515 – 6.4720 10 May 2004 1 Aug 2009 31 Jan 2010
989 – 6.6792 24 May 2005 1 Aug 2010 31 Jan 2011
2,504

Mr Edgar D Ancona — 56,175
(1),(2)&(3)
US$14.6000 10 Nov 1997 10 Nov 1998 10 Nov 2007
64,200

(1)&(3)
– US$13.7100 9 Nov 1998 9 Nov 1999 9 Nov 2008
80,250

(1)&(3)
– US$16.9600 8 Nov 1999 8 Nov 2000 8 Nov 2009
85,600

(1)&(3)
– US$18.4000 13 Nov 2000 13 Nov 2001 13 Nov 2010
93,625

(1)&(3)
– US$21.3700 12 Nov 2001 12 Nov 2002 12 Nov 2011
33,438

(3)
– US$10.6600 20 Nov 2002 20 Nov 2003 20 Nov 2012
51,000 – 9.1350 3 Nov 2003 3 Nov 2006 3 Nov 2013
51,000 – 8.2830 30 Apr 2004 30 Apr 2007 30 Apr 2014
459,113

75
Options exercised
Options during the first
held at half of the year Exercise
30 June (ordinary shares price Date Exercisable Exercisable
2007 of US$0.50 each) per share granted from until
Mr Patrick K W Chan 6,500 – 7.4600 3 Apr 2000 3 Apr 2003 2 Apr 2010
6,000 – 8.7120 23 Apr 2001 23 Apr 2004 22 Apr 2011
6,500 – 8.4050 7 May 2002 7 May 2005 6 May 2012
7,000 – 6.9100 2 May 2003 2 May 2006 1 May 2013
26,000

Mr Joseph C Y Poon 9,000 – 6.3754 29 Mar 1999 29 Mar 2002 29 Mar 2009
4,750 – 7.4600 3 Apr 2000 3 Apr 2003 3 Apr 2010
2,750 – 8.7120 23 Apr 2001 23 Apr 2004 23 Apr 2011
4,400 – 8.4050 7 May 2002 7 May 2005 7 May 2012
5,050 – 6.9100 2 May 2003 2 May 2006 2 May 2013
1,515 – 6.4720 10 May 2004 1 Aug 2009 31 Jan 2010
989 – 6.6792 24 May 2005 1 Aug 2010 31 Jan 2011
28,454

Alternate Chief Executives:
Mr William W Leung 6,000 – 6.9100 2 May 2003 2 May 2006 1 May 2013
6,500 – 8.2830 30 Apr 2004 30 Apr 2007 29 Apr 2014
582 – 6.4720 10 May 2004 1 Aug 2007 31 Jan 2008
240 – HK$103.4401 26 Apr 2006 1 Aug 2007 31 Oct 2007
13,322

Mrs Dorothy K Y P Sit 3,000 – 8.7120 23 Apr 2001 23 Apr 2004 22 Apr 2011
2,435 – 6.6792 24 May 2005 1 Aug 2010 31 Jan 2011
5,435

Notes:
(1) Notification that Mr Edgar D Ancona held these unlisted physically settled options to acquire shares of US$0.50 each in HSBC Holdings
plc was given by him in June 2007 on his becoming aware of the same.
(2) At the date of exercise, 14 May 2007, the market value per share was 9.5000.
(3) These represent Mr Edgar D Ancona’s interests in options under HSBC Finance 1996 Long-Term Executive Incentive Compensation Plan.
These options arise from options he held over shares of Household International, Inc. (now HSBC Finance Corporation) before its
acquisition, which were converted into options over HSBC Holdings plc ordinary shares in the same ratio as the offer for HSBC Finance
Corporation and the exercise prices per share adjusted accordingly. These options were granted at nil consideration.

Additional Information (continued)
76
Conditional awards of shares
At 30 June 2007, the interests of the Directors and Alternate Chief Executives in the conditional awards of shares made in
favour of them under the HSBC Holdings plc Restricted Share Plan/HSBC Share Plans and held by various trusts for ordinary
shares of US$0.50 each in HSBC Holdings plc were as follows:
Awards Shares awarded
made during released
Awards held at the first half during the first Awards held at
1 January 2007 of the year half of the year 30 June 2007
(1)
Directors:
Mr Raymond C F Or 245,548 25,786 30,298 194,868
Mr Edgar D Ancona 68,369 31,464
(2)
– 101,800
Mr Patrick K W Chan 23,571 7,325 – 26,017
Mr Joseph C Y Poon 32,512 10,889 – 37,390
Mr Peter T S Wong 87,491 24,174
(4)
33,021 81,159

Alternate Chief Executives:
Mr William W Leung 25,760 7,325 – 33,826
Mrs Dorothy K Y P Sit 47,573 9,213
(3)
6,190 42,111

Notes:
(1) This includes additional shares arising from scrip dividends.
(2) Notification that Mr Edgar D Ancona held these shares on 30 March 2007 was given by him on 3 July 2007 on his becoming aware of
the same.
(3) Notification that Mrs Dorothy K Y P Sit held these shares on 30 March 2007 was given by her on 4 July 2007 on her becoming aware of
the same.
(4) Notification that Mr Peter T S Wong held these shares on 30 March 2007 was given by him on 4 July 2007 on his becoming aware of the same.
All the interests stated above represent long positions. As at 30 June 2007, no short positions were recorded in the Register
of Directors’ and Alternate Chief Executives’ Interests and Short Positions required to be kept under section 352 of the SFO.
Other than those disclosed above, no right to subscribe for equity or debt securities of the Bank has been granted by the Bank
to, nor have any such rights been exercised by, any person during the half year ended 30 June 2007.
Substantial interests in share capital
The register maintained by the Bank pursuant to the SFO recorded that, as at 30 June 2007, the following corporations had
interests (as defined in that Ordinance) in the Bank set opposite their respective names:
Number of Ordinary Shares
of HK$5 each in the Bank
Name of Corporation (Percentage of total)
The Hongkong and Shanghai Banking Corporation Limited 1,188,057,371 (62.14%)
HSBC Asia Holdings BV 1,188,057,371 (62.14%)
HSBC Asia Holdings (UK) 1,188,057,371 (62.14%)
HSBC Holdings BV 1,188,057,371 (62.14%)
HSBC Finance (Netherlands) 1,188,057,371 (62.14%)
HSBC Holdings plc 1,188,057,371 (62.14%)

77
The Hongkong and Shanghai Banking Corporation Limited is a subsidiary of HSBC Asia Holdings BV, which is a wholly-owned
subsidiary of HSBC Asia Holdings (UK), which in turn is a wholly-owned subsidiary of HSBC Holdings BV. HSBC Holdings BV
is a wholly-owned subsidiary of HSBC Finance (Netherlands), which in turn is a wholly-owned subsidiary of HSBC Holdings
plc. Accordingly, The Hongkong and Shanghai Banking Corporation Limited’s interests are recorded as the interests of HSBC
Asia Holdings BV, HSBC Asia Holdings (UK), HSBC Holdings BV, HSBC Finance (Netherlands) and HSBC Holdings plc.
The Directors regard HSBC Holdings plc to be the beneficial owner of 1,188,057,371 ordinary shares in the Bank (62.14%).
All the interests stated above represent long positions. As at 30 June 2007, no short positions were recorded in the Register
of Interests in Shares and Short Positions required to be kept under section 336 of the SFO.
Capital issue
In June 2007, the Bank contracted to issue floating-rate subordinated notes amounting to US$300 million that mature in July
2017 with a one-time call option exercisable by the Bank in July 2012. The notes were issued to help the Bank maintain a
more balanced capital structure.
Purchase, sale or redemption of the Bank’s listed securities
Save for the contracted issuance of subordinated notes of US$300 million, during the six months ended 30 June 2007, there
was no purchase, sale or redemption by the Bank, or any of its subsidiaries, of the Bank’s listed securities.
Remuneration and staff development
There have been no material changes to the information disclosed in the Annual Report 2006 in respect of the remuneration
of employees, remuneration policies and staff development.
Code on Corporate Governance Practices
The Bank follows all the code provisions set out in the Code on Corporate Governance Practices contained in Appendix 14 of
the Listing Rules throughout the period of six months ended 30 June 2007.
The Audit Committee of the Bank has reviewed the results for the half year ended 30 June 2007.
Register of shareholders
The Register of Shareholders of the Bank will be closed on Tuesday, 21 August 2007, during which no transfer of shares can
be registered. In order to qualify for the second interim dividend, all transfers, accompanied by the relevant share certificates,
must be lodged with the Bank’s Registrars, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th
Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, for registration not later than 4:30 pm on Monday, 20
August 2007. The second interim dividend will be payable on Thursday, 30 August 2007 to shareholders on the Register of
Shareholders of the Bank on Tuesday, 21 August 2007.

Additional Information (continued)
78
Proposed timetables for the remaining quarterly dividends for 2007
Third interim dividend for 2007
Announcement date 5 November 2007
Book close and record date 27 November 2007
Payment date 11 December 2007
Fourth interim dividend for 2007
Announcement date 3 March 2008
Book close and record date 18 March 2008
Payment date 28 March 2008
Board of Directors
As at 30 July 2007, the Board of Directors of the Bank comprises Mr Raymond C F Or (Vice-Chairman and Chief Executive),
Mr Edgar D Ancona
#
, Mr John C C Chan

, Mr Patrick K W Chan, Dr Y T Cheng

, Dr Marvin K T Cheung

, Mr Jenkin Hui

, Mr
Peter T C Lee

, Dr Eric K C Li

, Dr Vincent H S Lo
#
, Mr Joseph C Y Poon, Dr David W K Sin

, Mr Richard Y S Tang

and Mr Peter
T S Wong
#
.
Independent non-executive Director
# Non-executive Director

79
Registered Office
83 Des Voeux Road Central, Hong Kong
Telephone: (852) 2198 1111
Facsimile: (852) 2868 4047
Telex: 73311 73323
SWIFT: HASE HK HH
Website: http://www.hangseng.com
Stock Code
O. Box 11258
Church Street Station
New York, NY 10286-1258
Telephone: 212-815-3700
Toll free (domestic): 1-888-BNY-ADRS or 1-888-269-2377
Website: http://www.adrbny.com
Email: shareowners@bankofny.com
The Bank offers investors in the United States a Sponsored Level-1 American Depositary Receipts Programme through The Bank of New
York.
Interim Report 2007
The Interim Report 2007 in both English and Chinese is now available in printed form and on the Bank’s website:
http://www.hangseng.com.
Shareholders who:
A) received this Interim Report 2007 by electronic means and wish to receive a printed copy; or
B) received this Interim Report 2007 in either English or Chinese and wish to receive a printed copy of the other language
version,
may send a notice in writing to the Bank’s Registrars:
Computershare Hong Kong Investor Services Limited
Rooms 1806-7, 18th Floor, Hopewell Centre
183 Queen’s Road East
Wanchai, Hong Kong
Facsimile: (852) 2529 6087
Email: hkinfo@computershare.com.hk
Shareholders who have chosen to receive this Interim Report 2007 by electronic means through the Bank’s website and who,
for any reason, have difficulty in receiving or gaining access to this Interim Report 2007, may submit a written request to the
Bank’s Registrars, Computershare Hong Kong Investor Services Limited, and be sent this Interim Report 2007 in printed form
free of charge.
Shareholders may change their choice of language or means of receipt of the Bank’s future corporate communications at any
time, free of charge, by completing and sending to the Bank’s Registrars, Computershare Hong Kong Investor Services
Limited, a change request form which can be obtained from the Bank’s Registrars.

✹a76❙❙❑❊❚a76✣a4✰❊a76❊◗a4✾❍a73❘
Hang Seng Bank Limited 2007