As Reported (Adjusted to Continuing Operations Basis of Reporting)	Revised
Nonaccrual consumer receivables:
December 31, 2007	$7.2 billion	$7.5 billion
December 31, 2006	4.4 billion	4.6 billion
Foregone interest income:
Year ended December 31, 2007	$919 million	$938 million
Year ended December 31, 2006	582 million	596 million
Interest income on nonaccrual consumer receivables:
Year ended December 31, 2007	$499 million	$500 million
Year ended December 31, 2006	309 million	310 million
Real estate secured delinquency ratio:
December 31, 2007	7.11%	7.37%
December 31, 2006	3.46	3.60
Consumer delinquency ratio:
December 31, 2007	7.41%	7.56%
December 31, 2006	4.43	4.53
Total delinquency ratio:
December 31, 2007	7.40%	7.55%
December 31, 2006	4.43	4.52

Exhibit No.	Description
99.01	Historical audited consolidated financial statements of HSBC Finance Corporation, reflecting discontinued operations, changes in segments as well as changes in presentation for receivables held for sale. Also included is the Report of Independent Registered Public Accounting Firm dated March 3, 2008, except as to Notes 1, 2, 3, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 19, 20, 21, 22, 23, 24, 25, 26 and 27, which are dated as of November 28, 2008.
99.02	Consent of KPMG LLP.

Year ended December 31,	2007	2006	2005
	(in millions)
Finance and other interest income	$18,146	$16,974	$12,298
Interest expense:
HSBC affiliates	778	729	382
Non-affiliates	7,121	6,413	3,988
Net interest income	10,247	9,832	7,928
Provision for credit losses	10,632	6,137	4,084
Net interest income (loss) after provision for credit losses	(385 )	3,695	3,844
Other revenues:
Securitization revenue	70	167	194
Insurance revenue	467	465	436
Investment income	128	251	109
Derivative (expense) income	(68)	179	155
Gain on debt designated at fair value and related derivatives	1,275	-	-
Fee income	2,388	1,887	1,490
Enhancement services revenue	634	513	339
Taxpayer financial services revenue	247	258	277
Gain on receivable sales to HSBC affiliates	419	422	413
Servicing and other fees from HSBC affiliates	504	476	440
Other (expense) income	(82 )	157	290
Total other revenues	5,982	4,775	4,143
Costs and expenses:
Salaries and employee benefits	2,196	2,178	1,859
Sales incentives	200	349	386
Occupancy and equipment expenses	333	271	263
Other marketing expenses	739	806	684
Other servicing and administrative expenses	1,132	849	615
Support services from HSBC affiliates	1,146	1,037	877
Amortization of intangibles	253	269	294
Policyholders' benefits	231	252	241
Goodwill and other intangible asset impairment charges	4,513	-	-
Total costs and expenses	10,743	6,011	5,219
Income (loss) from continuing operations before income tax expense (benefit)	(5,146)	2,459	2,768
Income tax expense (benefit)	(859 )	886	928
Income (loss) from continuing operations	(4,287)	1,573	1,840
Discontinued Operations (Note 3);
Income (loss) from discontinued operations	(705)	(172)	(105)
Income tax expense (benefit)	(86 )	(42 )	(37 )
Loss from discontinued operations	(619 )	(130 )	(68 )
Net income (loss)	$(4,906 )	$1,443	$1,772

Year ended December 31,	2007	2006
	(in millions,
	except share data)
Assets
Cash	$663	$738
Interest bearing deposits with banks	335	188
Securities purchased under agreements to resell	1,506	171
Securities	3,152	4,319
Receivables, net	142,409	150,406
Receivables held for sale	80	1,741
Intangible assets, net	1,103	2,214
Goodwill	2,827	6,568
Properties and equipment, net	349	359
Real estate owned	1,023	670
Derivative financial assets	46	292
Other assets	6,940	4,902
Assets of discontinued operations	5,294	6,798
Total assets	$165,727	$179,366
Liabilities
Debt:
Commercial paper, bank and other borrowings	$8,399	$11,021
Due to affiliates	11,359	10,887
Long term debt (with original maturities over one year, including $32.9 billion at December 31, 2007 and $0 at December 31, 2006 carried at fair value)	123,013	127,347
Total debt	142,771	149,255
Insurance policy and claim reserves	998	1,076
Derivative related liabilities	14	6
Liability for pension benefits	380	337
Other liabilities	3,147	3,474
Liabilities of discontinued operations	4,258	5,128
Total liabilities	151,568	159,276
Shareholder's(s') equity
Redeemable preferred stock, 1,501,100 shares authorized, Series B, $0.01 par value, 575,000 shares issued	575	575
Common shareholder's equity:
Common stock, $0.01 par value, 100 shares authorized; 57 shares issued	-	-
Additional paid-in capital	18,227	17,279
(Accumulated deficit) retained earnings	(4,423)	1,877
Accumulated other comprehensive income (loss)	(220 )	359
Total common shareholder's equity	13,584	19,515
Total liabilities and shareholder's(s') equity	$165,727	$179,366

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Preferred stock
Balance at beginning of period	$575	$575	$1,100
Issuance of Series B preferred stock	-	-	575
Exchange of Series A preferred stock for common stock	-	-	(1,100 )
Balance at end of period	$575	$575	$575
Common shareholder's equity
Common stock
Balance at beginning of period	$-	$-	$-
Exchange of common stock for Series A preferred stock	-	-	-
Balance at end of period	$-	$-	$-
Additional paid-in capital
Balance at beginning of period	$17,279	$17,145	$14,627
Premium on sale of European Operations to affiliate	-	13	-
Premium on sale of  U.K.  credit card business to affiliate	-	-	182
Exchange of common stock for Series A preferred stock	-	-	1,112
Capital contribution from parent company	950	163	1,200
Return of capital to HSBC	(18)	(49)	(19)
Employee benefit plans, including transfers and other	16	7	59
Issuance costs of Series B preferred stock	-	-	(16 )
Balance at end of period	$18,227	$17,279	$17,145
Accumulated deficit retained earnings
Balance at beginning of period	$1,877	$1,280	$571
Adjustment to initially apply the fair value method of accounting under FASB Statement No. 159, net of tax	(538)	-	-
Net income (loss)	(4,906)	1,443	1,772
Cash dividend equivalents on HSBC's Restricted Share Plan	(7)	-	-
Dividends:
Preferred stock	(37)	(37)	(83)
Common stock	(812 )	(809 )	(980 )
Balance at end of period	$(4,423)	$1,877	$1,280
Accumulated other comprehensive income (loss)
Balance at beginning of period	$359	$479	$643
Net change in unrealized gains (losses) on:
Derivatives classified as cash flow hedges	(657)	(321)	141
Securities available for sale and interest-only strip receivables	10	(21)	(56)
Minimum pension liability	-	-	4
FASB Statement No. 158 adjustment, net of tax	(2)	-	-
Foreign currency translation adjustments	70	223	(253 )
Other comprehensive (loss), net of tax	(579)	(119)	(164)
Adjustment to initially apply FASB Statement No. 158, net of tax	-	(1 )	-
Balance at end of period	$(220 )	$359	$479
Total common shareholder's equity	$13,584	$19,515	$18,904
Comprehensive income
Net income (loss)	$(4,906)	$1,443	$1,772
Other comprehensive income (loss)	(579 )	(119 )	(164 )
Comprehensive income (loss)	$(5,485 )	$1,324	$1,608
Preferred stock
Balance at beginning of period	575	575	1,100
Issuance of Series B preferred stock	-	-	575
Exchange of Series A preferred stock to common stock	-	-	(1,100 )
Balance at end of period	575	575	575
Common stock
Issued
Balance at beginning of period	55	55	50
Issuance of common stock to parent	2	-	5
Balance at end of period	57	55	55

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Cash flows from operating activities
Net income (loss)	$(4,906)	$1,443	$1,772
Loss from discontinued operations	619	130	68
Income (loss) from continuing operations	(4,287)	1,573	1,840
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	10,632	6,137	4,084
Gain on receivable sales to HSBC affiliates	(419)	(422)	(413)
Loss on sale of real estate owned, including lower of cost or market adjustments	304	155	164
Gain on sale of investment in Kanbay International, Inc.	-	(123)	-
Insurance policy and claim reserves	4	(6)	(24)
Depreciation and amortization	340	378	390
Mark-to-market on debt designated at fair value and related derivatives	(1,593)	-	-
Gain on sale of MasterCard Class B shares	(113)	-	-
Goodwill and other intangible asset impairment charges	4,513	-	-
Deferred income tax (benefit) provision	(1,074)	(536)	(360)
Net change in other assets	(959)	(1,480)	165
Net change in other liabilities	(272)	991	437
Net change in receivables held for sale	1,661	78	(672)
Foreign exchange and SFAS No. 133 movements on long term debt and net change in non-FVO related derivative assets and liabilities	3,331	895	(447)
Excess tax benefits from share-based compensation arrangements	(8)	(16)	-
Other, net	239	(6 )	(541 )
Cash provided by operating activities - continuing operations	12,299	7,618	4,623
Cash provided by operating activities - discontinued operations	284	47	932
Net cash provided by operating activities	12,583	7,665	5,555
Cash flows from investing activities
Securities:
Purchased	(1,144)	(1,881)	(730)
Matured	775	1,713	555
Sold	173	492	429
Net change in short-term securities available for sale	1,324	(606)	(548)
Net change in securities purchased under agreements to resell	(1,335)	(93)	2,573
Net change in interest bearing deposits with banks	(146)	(111)	262
Receivables:
Originations, net of collections	(6,396)	(25,148)	(34,123)
Purchases and related premiums	(220)	(3,225)	(1,053)
Proceeds from sales of real estate owned	1,588	1,178	1,032
Net change in interest-only strip receivables	6	(5)	214
Cash received in sale of real estate secured receivables held in portfolio to a third party	2,692	-	-
Cash received in sale of MasterCard Class B shares	113	-	-
Net cash paid for acquisition of Metris	-	-	(1,572)
Net cash paid for acquisition of Solstice	-	(50)	-
Properties and equipment:
Purchases	(131)	(95)	(66)
Sales	38	17	-
Cash used in investing activities - continuing operations	(2,663)	(27,814)	(33,027)
Cash provided by investing activities - discontinued operations	518	825	2,658
Net cash used in investing activities	(2,145 )	(26,989 )	(30,369 )

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Cash flows from financing activities
Debt:
Net change in short-term debt and deposits	(2,708)	(387)	2,373
Net change in due to affiliates	472	(423)	5,005
Long term debt issued	18,490	41,138	40,214
Long term debt retired	(26,063)	(19,064)	(20,967)
Issuance of company obligated mandatorily redeemable preferred securities of subsidiary trusts to HSBC	-	-	1,031
Redemption of company obligated mandatorily redeemable preferred securities of subsidiary trusts	-	(412)	(309)
Insurance:
Policyholders' benefits paid	(97)	(105)	(91)
Cash received from policyholders	49	64	23
Capital contribution from parent	950	163	1,200
Shareholder's dividends	(849)	(846)	(1,063)
Issuance of preferred stock	-	-	559
Excess tax benefits from share-based compensation arrangements	8	16	-
Cash provided by (used in) financing activities - continuing operations	(9,748)	20,144	27,975
Cash used in financing activities - discontinued operations	(770 )	(872 )	(2,638 )
Net cash provided by (used in) financing activities	(10,518 )	19,272	25,337
Effect of exchange rate changes on cash	(8 )	20	(12 )
Net change in cash	(88)	(32)	511
Cash at beginning of period(1)	871	903	392
Cash at end of period(2)	$783	$871	$903
Supplemental Cash Flow Information:
Interest paid	$8,220	$7,233	$4,824
Income taxes paid	737	1,428	1,161
Supplemental Noncash Financing and Capital Activities:
Affiliate preferred stock received in sale of  U.K.  credit card business	$-	$-	$261
Exchange of preferred for common stock	-	-	1,112
Transfer of receivables to Real Estate Owned	2,219	1,435	994

Product	Charge-off Policies and Practices	Nonaccrual Policies and Practices(1)
Real estate secured(2)	Carrying values in excess of net realizable value are charged-off at or before the time foreclosure is completed or when settlement is reached with the borrower. If foreclosure is not pursued (which frequently occurs on loans in the second lien position) and there is no reasonable expectation for recovery (insurance claim, title claim, pre-discharge bankrupt account), generally the account will be charged-off no later than by the end of the month in which the account becomes eight months contractually delinquent.	Interest income accruals are suspended when principal or interest payments are more than three months contractually past due and resumed when the receivable becomes less than three months contractually past due.
Auto finance(3)(5)	Carrying values in excess of net realizable value are charged off at the earlier of the following:  •     the collateral has been repossessed and sold,  •     the collateral has been in our possession for more than 30 days (prior to December 2006, 90 days), or  •     the loan becomes 150 days contractually delinquent.	Interest income accruals are suspended and the portion of previously accrued interest expected to be uncollectible is written off when principal payments are more than two months contractually past due and resumed when the receivable becomes less than two months contractually past due.
Credit card(4)	Generally charged-off by the end of the month in which the account becomes six months contractually delinquent.	Interest generally accrues until charge-off.
Private label(4)	Our domestic private label receivable portfolio (excluding retail sales contracts at our Consumer Lending business) was sold to HSBC Bank  USA  on December 29, 2004. Prior to December 2004, receivables were generally charged-off the month following the month in which the account became nine months contractually delinquent. However, receivables originated through new domestic merchant relationships beginning in the fourth quarter of 2002 were charged off by the end of the month in which the account became six months contractually delinquent.	Interest generally accrues until charge-off, except for retail sales contracts at our Consumer Lending business. Interest income accruals for retail sales contracts are suspended when principal or interest payments are more than three months contractually delinquent. After suspension, interest income is generally recorded as collectible.
	Retail sales contracts at our Consumer Lending business generally charge-off the month following the month in which the account becomes nine months contractually delinquent and no payment is received in six months, but in no event to exceed 12 months contractually delinquent.
Personal non-credit card(4)	Generally charged-off the month following the month in which the account becomes nine months contractually delinquent and no payment received in six months, but in no event to exceed 12 months contractually delinquent (except in our discontinued United Kingdom business which did not include a recency factor and, prior to December 31, 2006, may be longer).	Interest income accruals are suspended when principal or interest payments are more than three months contractually delinquent. For PHLs, interest income accruals resume if the receivable becomes less than three months contractually past due. For all other personal non- credit card receivables, interest income is generally recorded as collected.

	Balance Sheet January 1, 2007 Prior to Adoption of FVO	Net Gain (Loss) Upon Adoption	Balance Sheet January 1, 2007 After Adoption of FVO
	(in millions)
Fixed rate debt designated at fair value	$(30,088 )	$(855 )	$(30,943 )
Pre-tax cumulative-effect of adoption of FVO		(855)
Increase in deferred tax asset		317
After-tax cumulative-effect of adoption of FVO adjustment to retained earnings		$(538 )

	December 31, 2007	December 31, 2006
	(in millions)
Cash	$120	$133
Securities	-	612
Receivables, net of credit loss reserves of $327 million and $220 million, respectively	4,966	5,240
Intangible assets, net	4	4
Goodwill	-	442
Properties and equipment, net	66	67
Other assets	138	300
Assets of discontinued operations	$5,294	$6,798
Commercial paper, bank and other borrowings	$25	$34
Due to affiliates	3,543	4,285
Long term debt	472	391
Insurance policy and claims reserves	-	243
Other liabilities	218	175
Liabilities of discontinued operations	$4,258	$5,128

Year ended December 31,	2007	2006	2005
	(in millions)
Net interest income and other revenues, excluding insurance revenue	$382	$468	$715
Insurance revenue	340	536	561
Provision for credit losses	395	427	458
Policyholder benefits	189	215	215
Loss before income tax benefit	(705)	(172)	(105)
Income tax benefit	(86)	(42)	(37)
Loss from discontinued operations	(619)	(130)	(68)

	One-Time Termination and Other Employee Benefits	Lease Termination and Associated Costs	Total
	(in millions)
Restructuring costs recorded in 2007	$19	$25	$44
Restructuring costs paid during 2007	(13 )	(4 )	(17 )
Restructure liability at December 31, 2007	$6	$21	$27

	One-Time Termination and Other Employee Benefits	Lease Termination and Associated Costs	Total
	(in millions)
Restructuring costs recorded in 2007	$8	$17	$25
Restructuring costs paid during 2007	(1 )	(3 )	(4 )
Restructure liability at December 31, 2007	$7	$14	$21

	One-Time Termination and Other Employee Benefits	Lease Termination and Associated Costs	Total
	(in millions)
Restructuring costs recorded in 2007	$5	$8	$13
Restructuring costs paid during 2007	(4 )	(4 )	(8 )
Restructure liability at December 31, 2007	$1	$4	$5

	One-Time Termination and Other Employee Benefits	Lease Termination and Associated Costs	Fixed Asset Write-off	Total
	(in millions)
Restructuring costs recorded in 2007
Mortgage Services	$19	$25	$11	$55
Consumer Lending	8	17	6	31
Carmel  Facility	5	2	-	7
Canadian Business	5	8	-	13
	$37	$52	$17	$106

December 31, 2007	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(in millions)
Corporate debt securities	$2,173	$18	$(28)	$2,163
Money market funds	194	-	-	194
U.S.  government sponsored enterprises(1)	253	2	(2)	253
U.S.  government and Federal agency debt securities	37	1	-	38
Non-government mortgage backed securities	208	-	(3)	205
Other	274	1	(9 )	266
Subtotal	3,139	22	(42)	3,119
Accrued investment income	33	-	-	33
Total securities available for sale	$3,172	$22	$(42 )	$3,152

December 31, 2006	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(in millions)
Corporate debt securities	$2,288	$11	$(40)	$2,259
Money market funds	1,051	-	-	1,051
U.S.  government sponsored enterprises(1)	369	1	(3)	367
U.S.  government and Federal agency debt securities	43	-	(1)	42
Non-government mortgage backed securities	271	-	-	271
Other	296	-	(3 )	293
Subtotal	4,318	12	(47)	4,283
Accrued investment income	36	-	-	36
Total securities available for sale	$4,354	$12	$(47 )	$4,319

	Less than One Year			Greater than One Year
December 31, 2007	Number of Securities	Gross Unrealized Losses	Aggregate Fair Value of Investments	Number of Securities	Gross Unrealized Losses	Aggregate Fair Value of Investments
	(dollars are in millions)
Corporate debt securities	146	$(8)	$445	340	$(20)	$798
U.S.  government sponsored enterprises	3	-(1)	15	38	(2)	75
U.S.  government and Federal agency debt securities	-	-	-	4	-(1)	9
Non-government mortgage	8	(1)	52	9	(2)	32
Other	46	(9)	79	35	-(1)	94

	Less than One Year			Greater than One Year
December 31, 2006	Number of Securities	Gross Unrealized Losses	Aggregate Fair Value of Investments	Number of Securities	Gross Unrealized Losses	Aggregate Fair Value of Investments
	(dollars are in millions)
Corporate debt securities	126	$(6)	$371	511	$(34)	$1,178
U.S.  government sponsored enterprises	30	-(1)	101	43	(3)	149
U.S.  government and Federal agency debt securities	8	-(1)	21	20	(1)	16
Non-government mortgage	10	-(1)	60	9	-	7
Other	16	-(1)	57	52	(3)	173

	At December 31, 2007
	Due Within 1 Year	After 1 but Within 5 Years	After 5 but Within 10 Years	After 10 Years	Total
	(dollars are in millions)
Corporate debt securities:
Amortized cost	$463	$875	$248	$587	$2,173
Fair value	462	880	247	574	2,163
Yield(1)	4.90%	4.74%	5.07%	5.52%	5.02%
U.S.  government sponsored enterprises:
Amortized cost	$15	$10	$55	$173	$253
Fair value	15	9	55	174	253
Yield(1)	3.31%	6.17%	5.19%	5.06%	5.03%
U.S.  government and Federal agency debt securities:
Amortized cost	$11	$3	$12	$11	$37
Fair value	11	4	12	11	38
Yield(1)	3.89%	4.86%	4.32%	4.69%	4.36%

At December 31,	2007	2006
	(in millions)
Real estate secured	$86,638	$94,358
Auto finance	13,257	12,504
Credit card	30,390	27,714
Private label	1,579	1,176
Personal non-credit card	18,845	18,942
Commercial and other	144	181
Total receivables	150,853	154,875
HSBC acquisition purchase accounting fair value adjustments	(76)	(64)
Accrued finance charges	2,493	2,162
Credit loss reserve for owned receivables	(10,577)	(6,366)
Unearned credit insurance premiums and claims reserves	(286)	(258)
Interest-only strip receivables	-	6
Amounts due and deferred from receivable sales	2	51
Total receivables, net	$142,409	$150,406
Real estate secured receivables held for sale	$80	$1,741

Year ended December 31,	2007	2006
	(in millions)
Accretable yield at beginning of period	$(76)	$(122)
Accretable yield additions during the period	-	(19)
Accretable yield amortized to interest income during the period	49	100
Reclassification from non-accretable difference	(9 )	(35 )
Accretable yield at end of period	$(36 )	$(76 )

At December 31,	2007	2006
	(in millions)
Real estate secured:
Closed-end:
First lien	$71,362	$76,257
Second lien	11,748	13,335
Revolving:
First lien	436	556
Second lien	3,092	4,210
Total real estate secured receivables	$86,638	$94,358

As of December 31,	2007	2006	2005
Real estate secured	$2,257	$1,766	$1,380
Auto finance	358	311	270
Credit card	299	215	147
Private label	1,433	887	834
Personal non-credit card	800	697	607
Commercial and other	-	-	-
Total	$5,147	$3,876	$3,238

At December 31,	2007	2006
	(in millions)
Auto finance	$-	$271
Credit card	124	500
Personal non-credit card	-	178
Total	$124	$949

At December 31, 2007	2008	2009	2010	2011	2012	Thereafter	Total
	(in millions)
Real estate secured	$663	$458	$404	$432	$646	$84,035	$86,638
Auto finance	3,287	2,960	2,616	2,163	1,501	730	13,257
Credit card	24,057	4,587	1,227	356	110	53	30,390
Private label	955	144	143	171	166	0	1,579
Personal non-credit card	2,287	1,490	2,603	4,358	4,344	3,763	18,845
Commercial and other	0	0	20	52	0	72	144
Total	$31,249	$9,639	$7,013	$7,532	$6,767	$88,653	$150,853

At December 31, 2007	Over 1 But Within 5 Years	Over 5 Years
	(in millions)
Receivables at predetermined interest rates	$25,011	$70,107
Receivables at floating or adjustable rates	5,940	18,546
Total	$30,951	$88,653

At December 31,	2007	2006
	(in millions)
TDR Loans(1):
Real estate secured:
Mortgage Services	$1,531	$107
Consumer Lending	730	634
Foreign and all other	67	48
Total real estate secured	2,328	789
Auto finance	144	176
Credit card	329	308
Private label	5	7
Personal non-credit card	500	404
Commercial and other	-	1
Total TDR Loans	$3,306	$1,685
Credit loss reserves for TDR Loans:
Real estate secured:
Mortgage Services	$84	$16
Consumer Lending	65	55
Foreign and all other	9	9
Total real estate secured	158	80
Auto finance	29	41
Credit card	56	62
Private label	1	2
Personal non-credit card	88	96
Commercial and other	-	1
Total credit loss reserves for TDR Loans(2)	$332	$282

Year ended December 31,	2007	2006	2005
	(in millions)
Average balance of TDR Loans(1)	$2,373	$1,548	$1,549
Interest income recognized on TDR Loans(1)	151	83	85

At December 31,	2007	2006	2005
	(in millions)
Credit loss reserves at beginning of period	$6,366	$4,323	$3,408
Provision for credit losses	10,632	6,137	4,084
Charge-offs	(7,189)	(4,691)	(3,699)
Recoveries	770	598	389
Other, net	(2 )	(1 )	141
Credit loss reserves at end of period	$10,577	$6,366	$4,323

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
Net initial gains	$-	$-	$-
Net replenishment gains(1)	24	30	134
Servicing revenue and excess spread	46	137	60
Total securitization related revenue	$70	$167	$194

Year ended December 31,	Auto Finance	Credit Card	Personal Non-Credit Card	Total
2007
Servicing fees received	$3	$10	$1	$14
Other cash flow received on retained interests(1)	44	50	-	94
2006
Servicing fees received	$16	$22	$10	$48
Other cash flow received on retained interests(1)	97	108	18	223
2005
Servicing fees received	$45	$94	$46	$185
Other cash flow received on retained interests(1)	40	229	50	319

	2007		2006
At December 31,	Receivables Outstanding	Delinquent Receivables	Receivables Outstanding	Delinquent Receivables
	(dollars are in millions)
Owned receivables:
Real estate secured	$86,718	7.37%	$96,099	3.60%
Auto finance	13,257	3.67	12,504	3.18
Credit card	30,390	5.77	27,714	4.57
Private label	1,579	4.66	1,176	6.82
Personal non-credit card	18,845	14.29	18,942	9.84
Other(1)	13	-	15	3.01
Total consumer	150,802	7.56	156,450	4.53
Commercial	131	-	166	-
Total owned receivables	$150,933	7.55 %	$156,616	4.52 %
Receivables serviced with limited recourse:
Auto finance	$-	-%	$271	6.64%
Credit card	124	2.42	500	2.00
Personal non-credit card	-	-	178	14.61
Total receivables serviced with limited recourse	$124	2.42 %	$949	5.69 %

Year ended December 31,	2007 Average Receivables	Net Charge-offs	2006 Average Receivables	Net Charge-offs
	(dollars are in millions)
Owned receivables:
Real estate secured	$91,879	2.34%	$90,656	1.00%
Auto finance	12,901	4.10	11,660	3.67
Credit card	28,646	7.28	25,065	5.56
Private label	1,257	6.02	1,195	5.99
Personal non-credit card	19,101	8.24	17,785	7.23
Other(1)	14	1.70	18	1.28
Total consumer	153,798	4.17	146,379	2.79
Commercial	140	-	177	.43
Total owned receivables	$153,938	4.17 %	$146,556	2.79 %
Receivables serviced with limited recourse:
Auto finance	$139	6.47%	$720	10.28%
Credit card	452	3.98	974	3.49
Personal non-credit card	42	7.14	498	9.24
Total receivables serviced with limited recourse	$633	4.74 %	$2,192	7.03 %

	At December 31,
			Depreciable
	2007	2006	Life
	(in millions)
Land	$15	$19	-
Buildings and improvements	211	269	10-40 years
Furniture and equipment	353	322	3-10
Total	579	610
Accumulated depreciation and amortization	230	251
Properties and equipment, net	$349	$359

December 31, 2007	Gross	Impairment Charges	Accumulated Amortization	Carrying Value
	(in millions)
Purchased credit card relationships and related programs	$1,736	-	$717	$1,019
Retail services merchant relationships	270	-	257	13
Other loan related relationships	333	158	169	6
Trade names	700	700	-	-
Technology, customer lists and other contracts	282	-	217	65
Total	$3,321	$858	$1,360	$1,103

December 31, 2006	Gross	Impairment Charges	Accumulated Amortization	Carrying Value
	(in millions)
Purchased credit card relationships and related programs	$1,736	-	$580	$1,156
Retail services merchant relationships	270	-	203	67
Other loan related relationships	333	-	135	198
Trade names	700	-	-	700
Technology, customer lists and other contracts	282	-	189	93
Total	$3,321	$-	$1,107	$2,214

	(in months)
Purchased credit card relationships and related programs	106
Retail services merchant relationships	60
Other loan related relationships	62
Technology, customer lists and other contracts	85

Year ending December 31,	(in millions)
2008	$181
2009	168
2010	146
2011	139
2012	136
Thereafter	172

	2007	2006
	(in millions)
Balance at beginning of year	$6,568	$6,612
Adjustment to Metris purchase price	-	21
Acquisitions - 2006 Solstice	-	46
Goodwill impairment related to the Mortgage Services business	(881)	-
Goodwill impairment related to the Consumer Lending business	(2,462)	-
Goodwill impairment related to the Auto Finance business	(312)	-
Change in estimate of the tax basis of assets and liabilities recorded in the HSBC acquisition	(115)	(99)
Change in estimate of the tax basis of assets and liabilities recorded in the Metris acquisition	-	(13)
Impact of foreign currency translation	29	1
Balance at end of year	$2,827	$6,568

	Commercial Paper	Bank and Other Borrowings	Total
	(in millions)
2007
Balance	$8,396	$3	$8,399
Highest aggregate month-end balance			16,371
Average borrowings	10,987	4	10,991
Weighted-average interest rate:
At year-end	4.8%	3.0%	4.8%
Paid during year	5.5	8.0	5.5
2006
Balance	$11,012	$9	$11,021
Highest aggregate month-end balance			16,815
Average borrowings	12,344	227	12,571
Weighted-average interest rate:
At year-end	5.3%	3.7%	5.3%
Paid during year	5.0	4.3	4.9
2005
Balance	$11,360	$40	$11,400
Highest aggregate month-end balance			14,803
Average borrowings	11,877	39	11,916
Weighted-average interest rate:
At year-end	4.2%	4.4%	4.2%
Paid during year	3.4	3.3	3.4

At December 31,	2007	2006
	(in millions)
Senior Debt
Fixed rate:
8.875% Adjustable Conversion-Rate Equity Security Units	$542	$542
Secured financings:
3.00% to 3.99%; due 2008	100	195
4.00% to 4.99%; due 2008 to 2010	762	1,312
5.00% to 5.99%; due 2008 to 2012	3,632	3,956
Other fixed rate senior debt(1):
2.40% to 3.99%; due 2008 to 2032	633	1,235
4.00% to 4.99%; due 2008 to 2032	17,405	15,516
5.00% to 5.49%; due 2008 to 2032	12,957	12,417
5.50% to 5.99%; due 2008 to 2024	10,116	11,371
6.00% to 6.49%; due 2008 to 2033	8,485	9,659
6.50% to 6.99%; due 2008 to 2033	6,299	5,555
7.00% to 7.49%; due 2008 to 2032	2,307	2,925
7.50% to 7.99%; due 2008 to 2032	2,959	4,950
8.00% to 9.00%; due 2008 to 2013	1,291	1,263
Variable interest rate:
Secured financings - 4.92% to 7.38%; due 2008 to 2018	18,692	16,364
Other variable interest rate senior debt - 2.16% to 6.99%; due 2008 to 2018	35,728	38,354
Junior Subordinated Notes Issued to Capital Trusts	1,031	1,031
Unamortized Discount	(150)	(377)
HSBC Acquisition Purchase Accounting Fair Value Adjustments	224	1,079
Total long term debt	$123,013	$127,347

Year ended December 31,	2007
Interest rate component	$(994)
Credit risk component	1,616
Total mark-to-market on debt designated at fair value	622
Mark-to-market on the related derivatives	971
Net realized losses on the related derivatives	(318 )
Gain on debt designated at fair value and related derivatives	$1,275

	Household Capital Trust IX ("HCT IX")
	(dollars are
	in millions)
Junior Subordinated Notes:
Principal balance	$1,031
Interest rate	5.91%
Redeemable by issuer	November 2015
Stated maturity	November 2035
Preferred Securities:
Rate	5.91%
Face value	$1,000
Issue date	November 2005

	(in millions)
2008	$32,844
2009	23,821
2010	15,756
2011	12,767
2012	11,365
Thereafter	26,460
Total	$123,013

	2007	2006
	(in millions)
Deferred gains	$42	$156
Deferred losses	50	176
Weighted-average amortization period:
Deferred gains	4 years	7 years
Deferred losses	9 years	6 years
Increases (decreases) to carrying values resulting from net deferred gains and losses:
Long term debt	$(22)	$(47)
Accumulated other comprehensive income	14	27

	2007	2006
	(in millions)
Deferred gains	$135	$269
Deferred losses	555	1,052
Weighted-average amortization period:
Deferred gains	5 years	5 years
Deferred losses	5 years	5 years
Increases (decreases) to carrying values resulting from net deferred gains and losses:
Long term debt	$(109)	$(941)
Accumulated other comprehensive income	(311)	158

	2007	2006	2005
	(in millions)
Net realized gains (losses)	$     (24)	$     (7)	$     52
Mark-to-market on derivatives which do not qualify as effective hedges	4	17	62
Ineffectiveness	(48 )	169	41
Total	$     (68 )	$     179	$     155

	Exchange	Non-Exchange Traded
	Traded	Interest		Foreign Exchange		Interest Rate		Caps
	Options	Rate	Currency	Rate Contracts		Forward Contracts		and
	Purchased	Swaps	Swaps	Purchased	Sold	Purchased	Sold	Floors	Total
	(in millions)
2007
Notional amount, 2006	$4,600	$55,910	$24,841	$1,074	$583	$-	$-	$6,260	$93,268
New contracts	6,651	-	-	-	-	-	-	-	6,651
New contracts purchased from subsidiaries of HSBC	-	24,724	2,877	8,509	6,122	-	-	-	42,232
Matured or expired contracts	(11,251)	(7,582)	(1,961)	(9,038)	(6,155)	-	-	(2,475)	(38,462)
Terminated contracts	-	(9,728)	-	-	-	-	-	(846)	(10,574)
Change in Notional amount	-	-	-	-	-	-	-	-	-
Change in foreign exchange rate	-	203	-	(16 )	-	-	-	-	187
Notional amount, 2007	$-	$63,527	$25,757	$529	$550	$-	$-	$2,939	$93,302
Fair value, 2007(1):
Fair value hedges	$-	$13	$120	$-	$-	$-	$-	$-	$133
Cash flow hedges	-	(440)	3,375	-	-	-	-	-	2,935
Fair value option related derivatives	-	261	327	-	-	-	-	-	588
Non-hedging derivatives	-	(46 )	167	3	(5 )	-	-	-	119
Total	$-	$(212 )	$3,989	$3	$(5 )	$-	$-	$-	$3,775
2006
Notional amount, 2005	$4,870	$48,548	$21,175	$1,633	$465	$172	$-	$10,700	$87,563
New contracts	-	-	-	-	-	-	-	-	-
New contracts purchased from subsidiaries of HSBC	20,205	60,223	8,687	2,071	5,694	1,344	-	65	98,289
Matured or expired contracts	(17,675)	(4,377)	(3,747)	(2,851)	(5,710)	-	-	(4,505)	(38,865)
Terminated contracts	(2,800)	(49,571)	-	-	-	(1,516)	-	-	(53,887)
Change in Notional amount	-	1,087	(1,274)	-	-	-	-	-	(187)
Change in foreign exchange rate	-	-	-	221	134	-	-	-	355
Notional amount, 2006	$4,600	$55,910	$24,841	$1,074	$583	$-	$-	$6,260	$93,268
Fair value, 2006(1):
Fair value hedges	$-	$(740)	$(26)	$-	$-	$-	$-	$-	$(766)
Cash flow hedges	-	14	1,976	-	-	-	-	-	1,990
Non-hedging derivatives	-	(70 )	244	4	(6 )	-	-	1	173
Total	$-	$(796 )	$2,194	$4	$(6 )	$-	$-	$1	$1,397
2005
Notional amount, 2004	$1,691	$42,947	$17,543	$1,146	$614	$374	$-	$4,380	$68,695
New contracts	-	1	-	-	-	-	-	30	31
New contracts purchased from subsidiaries of HSBC	5,570	25,115	6,824	1,113	4,860	1,707	-	8,433	53,622
Matured or expired contracts	(2,391)	(4,013)	(3,192)	(482)	(4,762)	-	-	(1,894)	(16,734)
Terminated contracts	-	(15,502 )	-	(144 )	(247 )	(1,909 )	-	(249 )	(18,051 )
Notional amount, 2005	$4,870	$48,548	$21,175	$1,633	$465	$172	$-	$10,700	$87,563
Fair value, 2005(1):
Fair value hedges	$-	$(612)	$(178)	$-	$-	$-	$-	$-	$(790)
Cash flow hedges	-	103	658	(22)	-	-	-	-	739
Non-hedging derivatives	-	(28 )	(32 )	-	-	-	-	-	(60 )
Total	$-	$(537 )	$448	$(22 )	$-	$-	$-	$-	$(111 )

					Interest Rate
			Foreign Exchange		Forward	Other Risk
	Interest Rate	Currency	Rate Contracts		Contracts	Management
	Swaps	Swaps	Purchased	Sold	Purchased	Instruments
	(in millions)
2007
United States	$61,822	$25,757	$522	$540	$-	$2,939
Canada	1,705	-	7	10	-	-
	$63,527	$25,757	$529	$550	$-	$2,939
2006
United States	$54,703	$24,841	$1,068	$571	$-	$6,260
Canada	1,207	-	6	12	-	-
	$55,910	$24,841	$1,074	$583	$-	$6,260
2005
United States	$47,693	$21,175	$1,622	$465	$-	$10,700
Canada	855	-	11	-	172	-
	$48,548	$21,175	$1,633	$465	$172	$10,700

	2008	2009	2010	2011	2012	2013	Thereafter	Total
	(dollars are in millions)
Pay a fixed rate/receive a floating rate:
Notional value	$12,373	$11,590	$5,584	$153	$1,015	$390	$1,597	$32,702
Weighted-average receive rate	4.99%	4.84%	4.84%	1.50%	4.66%	1.50%	4.61%	4.82%
Weighted-average pay rate	5.01	5.10	4.99	4.35	4.25	5.02	4.69	5.00
Pay a floating rate/receive a fixed rate:
Notional value	$2,610	$5,727	$3,145	$5,564	$4,159	$1,286	$8,334	$30,825
Weighted-average receive rate	3.71%	4.19%	4.27%	4.55%	4.80%	4.09%	5.34%	4.61%
Weighted-average pay rate	4.80	4.92	5.31	5.11	4.83	5.38	5.06	5.03
Total notional value	$14,983	$17,317	$8,729	$5,717	$5,174	$1,676	$9,931	$63,527
Total weighted-average rates on swaps:
Receive rate	4.76%	4.62%	4.64%	4.46%	4.77%	3.48%	5.22%	4.72%
Pay rate	4.97	5.04	5.10	5.09	4.72	5.29	5.00	5.01

	(in millions)
Balance at January 1, 2007	$273
Additions based on tax positions related to the current year	26
Additions for tax positions of prior years	28
Reductions for tax positions of prior years	(70)
Settlements	(28)
Reductions for lapse of statute of limitations	-
Balance at December 31, 2007	$229

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Provision for income taxes related to continuing operations	$(859)	$886	$928
Income taxes related to adjustments included in common shareholder's equity:
Unrealized gains (losses) on investments and interest-only strip receivables, net	5	(11)	(26)
Unrealized gains (losses) on cash flow hedging instruments	(392)	(192)	75
Minimum pension liability	(3)	-	2
Changes in funded status of pension and post retirement benefit plans	(1)	2	-
Foreign currency translation adjustments	40	1	-
Exercise of stock based compensation	(11)	(21)	(9)
Tax on sale of European Operations to affiliate	-	3	-
Total	$(1,221 )	$668	$970

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Current
United States	$156	$1,380	$1,253
Canada	59	42	35
Total current	215	1,422	1,288
Deferred
United States	(1,070)	(536)	(360)
Canada	(4 )	-	-
Total deferred	(1,074 )	(536 )	(360 )
Total income taxes	$(859 )	$886	$928

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Deferred income tax (benefit) provision (excluding the effects of other components)	$(1,100)	$(542)	$(340)
Adjustment of valuation allowance	25	2	(2)
Change in operating loss carryforwards	(1)	8	(8)
Adjustment to statutory tax rate	2	(4 )	(10 )
Deferred income tax provision	$(1,074 )	$(536 )	$(360 )

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
United States	$(5,288)	$2,337	$2,668
Canada	142	122	100
Total income before income taxes	$(5,146 )	$2,459	$2,768

	Year Ended December 31, 2007		Year Ended December 31, 2006		Year Ended December 31, 2005
	(dollars are in millions)
Tax (benefit) at the  U.S.  federal statutory income tax rate	$(1,801)	(35.0)%	$861	35.0%	$968	35.0%
Increase (decrease) in rate resulting from:
State and local taxes, net of Federal benefit	(55)	(1.1)	90	3.7	25	.9
Non-deductible goodwill	1,025	19.9	-	-	-	-
Low income housing and other tax credits	(64)	(1.2)	(79)	(3.2)	(87)	(3.2)
Other	36	.7	14	.6	22	.8
Total income tax expense (benefit)	$(859 )	(16.7 )%	$886	36.1 %	$928	33.5 %

At December 31,	2007	2006
	(in millions)
Deferred Tax Assets
Credit loss reserves	$3,402	$2,023
Market value adjustment	377	327
Deferred compensation	180	138
Other	609	459
Total deferred tax assets	4,568	2,947
Valuation allowance	(50 )	(25 )
Total deferred tax assets net of valuation allowance	4,518	2,922
Deferred Tax Liabilities
Intangibles	173	833
Fee income	742	568
Deferred loan origination costs	361	301
Debt	132	69
Receivables sold	133	13
Receivables	74	107
Other	140	91
Total deferred tax liabilities	1,755	1,982
Net deferred tax asset	$2,763	$940

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Unrealized gains (losses) on investments and interest-only strip receivables:
Balance at beginning of period	$(23)	$(2)	$54
Other comprehensive income for period:
Net unrealized holding gains (losses) arising during period, net of tax of $6 million, $34 million and $(29) million, respectively	10	57	(56)
Reclassification adjustment for gains realized in net income, net of tax of $- million, $(45) million and $- million, respectively	-	(78 )	-
Total other comprehensive income for period	10	(21 )	(56 )
Balance at end of period	(13 )	(23 )	(2 )
Unrealized gains (losses) on cash flow hedging instruments:
Balance at beginning of period	(61)	260	119
Other comprehensive income for period:
Net gains (losses) arising during period, net of tax of $(372) million, $(124) million and $92 million, respectively	(635)	(204)	173
Reclassification adjustment for gains (losses) realized in net income, net of tax of $(13) million, $(68) million and $(18) million, respectively	(22 )	(117 )	(32 )
Total other comprehensive income for period	(657 )	(321 )	141
Balance at end of period	(718 )	(61 )	260
Pension liability:
Balance at beginning of period	(1)	-	(4)
Other comprehensive income for period:
Minimum pension liability, net of tax of $- million, $- million and $2 million, respectively	-	-	4
FASB Statement No. 158 adjustment, net of tax of $(1) million, $- million and $- million, respectively	(2 )	-	-
Total other comprehensive income for period	(2)	-	4
Adjustment to initially apply FASB Statement No. 158, net of tax of $- million, $1 million and $- million, respectively	-	(1 )	-
Balance at end of period	(3 )	(1 )	-
Foreign currency translation adjustments:
Balance at beginning of period	444	221	474
Other comprehensive income for period:
Translation gains (losses), net of tax of $40 million, $3 million and $(5) million, respectively	70	223	(253 )
Total other comprehensive income for period	70	223	(253 )
Balance at end of period	514	444	221
Total accumulated other comprehensive income (loss) at end of period	$(220 )	$359	$479

At December 31,	2007	2006
	(in millions)
Assets, (Liabilities) and Equity:
Derivative financial assets (liability), net	$34	$228
Affiliate preferred stock received in sale of  U.K.  credit card business(1)	301	294
Other assets	634	547
Due to affiliates	(11,359)	(10,887)
Other liabilities	(471)	(431)
Premium on sale of European Operations to affiliates recorded as an increase to additional paid in capital	-	13

For the year ended December 31,	2007	2006	2005
Income/(Expense):
Interest expense on borrowings from HSBC and subsidiaries	$(778)	$(729)	$(382)
Interest income from HSBC affiliates	43	26	38
Dividend income from affiliate preferred stock	21	18	-
HSBC Bank  USA :
Real estate secured servicing, sourcing, underwriting and pricing revenues	9	12	19
Gain on daily sale of domestic private label receivable originations	374	367	379
Gain on daily sale of credit card receivables	61	38	34
Loss on sale of real estate secured receivables	(16)	-	-
Gain on bulk sales of real estate secured receivables	-	17	-
Taxpayer financial services loan origination and other fees	(19)	(18)	(15)
Domestic private label receivable servicing and related fees	406	393	368
Other servicing, processing, origination and support revenues	61	43	28
Support services from HSBC affiliates	(1,146)	(1,037)	(877)
HSBC Technology & Services ( USA ) Inc. ("HTSU"):
Rental revenue	48	45	42
Administrative services revenue	13	12	14
Servicing and other fees from other HSBC affiliates	15	16	11
Stock based compensation expense with HSBC	(102)	(100)	(66)

	(dollars are in millions)
Junior Subordinated Notes:
Principal balance	$284
Redeemable by issuer	September 26, 2008
Stated maturity	November 15, 2033
Preferred Securities:
Rate	6.375%
Face value	$275
Issue date	September 2003

	2007		2006		2005
	HSBC Ordinary Shares	Weighted- Average Price per Share	HSBC Ordinary Shares	Weighted- Average Price per Share	HSBC Ordinary Shares	Weighted- Average Price per Share
Outstanding at beginning of year	6,060,800	$14.97	6,100,800	$14.97	6,245,800	$14.96
Granted	-	-	-	-	-	-
Exercised	-	-	-	-	-	-
Transferred	-	-	-	-	(105,000)	14.64
Expired or canceled	-	-	(40,000 )	14.37	(40,000 )	14.37
Outstanding at end of year	6,060,800	14.97	6,060,800	14.97	6,100,800	14.97
Exercisable at end of year	3,879,800	$15.31	2,909,850	$15.31	-	$-
Weighted-average fair value of options granted		$-		$-		$-

	Options Outstanding			Options Exercisable
Range of exercise prices	Number Outstanding	Weighted- Average Remaining Life	Weighted- Average Exercise Price	Number Outstanding	Weighted- Average Exercise Price
$12.51 - 15.00	2,181,000	6.34	14.37	-	$-
$15.01 - 17.50	3,879,800	5.85	15.31	3,879,800	$15.31

	2007		2006		2005
	HSBC Ordinary Shares	Weighted- Average Price per Share	HSBC Ordinary Shares	Weighted- Average Price per Share	HSBC Ordinary Shares	Weighted- Average Price per Share
Outstanding at beginning of year	25,995,589	$17.34	36,032,006	$16.09	38,865,993	$15.71
Granted	-	-	-	-	-	-
Exercised	(4,877,586)	14.51	(9,825,954)	12.73	(2,609,665)	10.92
Transferred in/(out)	172,976	18.66	47,580	8.62	(142,292)	12.15
Expired or canceled	(131,068 )	10.24	(258,043 )	16.78	(82,030 )	7.97
Outstanding at end of year	21,159,911	$18.04	25,995,589	$17.34	36,032,006	$16.09
Exercisable at end of year	21,159,911	$18.04	25,995,589	$17.34	34,479,337	$16.21

	Options Outstanding			Options Exercisable
Range of exercise prices	Number Outstanding	Weighted- Average Remaining Life	Weighted- Average Exercise Price	Number Outstanding	Weighted- Average Exercise Price
$ 1.00 - $ 5.00	7,251	.78	1.99	7,251	1.99
$10.01 - $12.50	2,307,172	4.90	10.66	2,307,172	10.66
$12.51 - $15.00	1,142,504	1.15	13.75	1,142,504	13.75
$15.01 - $17.50	4,518,173	1.83	16.95	4,518,173	16.95
$17.51 - $20.00	5,720,489	2.84	18.41	5,720,489	18.41
$20.01 - $25.00	7,464,322	3.87	21.37	7,464,322	21.37

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
RSRs awarded	4,028,913	4,959,838	6,669,152
Weighted-average fair market value per share	$17.67	$16.96	$15.86
RSRs outstanding at December 31	15,312,635	14,326,693	11,787,706
Compensation cost: (in millions)
Pre-tax	$92	$82	$42
After-tax	58	52	27

	2007	2006	2005
RSRs awarded	-	-	-
Weighted-average fair market value per share	$-	$-	$-
RSRs outstanding at December 31	55,612	653,900	1,309,073
Compensation cost: (in millions)
Pre-tax	$5	$4	$6
After-tax	3	2	4

	2007		2006		2005
	HSBC Ordinary Shares Granted	Fair Value per Share of Shares Granted	HSBC Ordinary Shares Granted	Fair Value per Share of Shares Granted	HSBC Ordinary Shares Granted	Fair Value per Share of Shares Granted
1 year vesting period	389,066	$3.71	296,410	$2.60	-	-
3 year vesting period	894,149	4.25	598,814	3.43	1,064,168	$3.73
5 year vesting period	214,600	4.09	124,563	3.49	236,782	3.78

	2007	2006	2005
Risk-free interest rate	4.55% - 4.90%	4.99% - 5.01%	4.3%
Expected life	1, 3 or 5 years	1, 3 or 5 years	3 or 5 years
Expected volatility	17.0%	17.0%	20.0%

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Service cost - benefits earned during the period	$55	$48	$46
Interest cost on projected benefit obligation	66	60	54
Expected return on assets	(83)	(77)	(78)
Amortization of prior service cost	-	-	-
Recognized losses (gains)	9	15	4
Pension expense	$47	$46	$26

	2007	2006	2005
Discount rate	5.90%	5.70%	6.00%
Salary increase assumption	3.75	3.75	3.75
Expected long-term rate of return on plan assets	8.00	8.00	8.33

Year ended December 31,	2007	2006
	(in millions)
Fair value of plan assets at beginning of year	$2,567	$2,383
Actual return on plan assets	186	246
Employer contributions	-	-
Benefits paid	(136 )	(62 )
Fair value of plan assets at end of year	$2,617	$2,567

Percentage of plan assets at December 31,	2007	2006
Equity securities	68%	69%
Debt securities	31	30
Other	1	1
Total	100 %	100 %

Year ended December 31,	2007	2006
	(in millions)
Projected benefit obligation at beginning of year	$2,698	$2,530
Service cost	111	102
Interest cost	159	145
Actuarial (gains) losses	(85)	(17)
Benefits paid	(136 )	(62 )
Projected benefit obligation at end of year	$2,747	$2,698

	HSBC North America	HSBC Finance Corporation's Share
	(in millions)
2008	$133	$65
2009	142	69
2010	151	73
2011	163	79
2012	181	89
2013-2017	1,027	463

	2007	2006	2005
Discount rate	6.55%	5.90%	5.70%
Salary increase assumption	3.75	3.75	3.75

	Year Ended December 31, 2007	Year Ended December 31, 2006	Year Ended December 31, 2005
	(in millions)
Service cost - benefits earned during the period	$5	$6	$5
Interest cost	14	14	15
Expected return on assets	-	-	-
Amortization of prior service cost	-	-	-
Recognized (gains) losses	(1 )	-	-
Net periodic postretirement benefit cost	$18	$20	$20

	2007	2006	2005
Discount rate	5.90%	5.70%	6.00%
Salary increase assumption	3.75	3.75	3.75

Year ended December 31,	2007	2006
	(in millions)
Accumulated benefit obligation at beginning of year	$232	$242
Service cost	5	6
Interest cost	14	14
Foreign currency exchange rate changes	4	-
Actuarial gains	(3)	(8)
Benefits paid	(21 )	(22 )
Accumulated benefit obligation at end of year	$231	$232

	(in millions)
2008	$16
2009	17
2010	17
2011	17
2012	18
2013-2017	89

	2007	2006	2005
Discount rate	6.55%	5.90%	5.70%
Salary increase assumption	3.75	3.75	3.75

	One Percent Increase	One Percent Decrease
	(in millions)
Effect on total of service and interest cost components	$.6	$(.5)
Effect on postretirement benefit obligation	7	(7)

	Consumer	Card and Retail Services	All Other	Adjustments/ Reconciling Items	IFRS Management Basis Consolidated Totals	Management Basis Adjustments(6)	IFRS Adjustments(5)	IFRS Reclassifications(8)	U.S.  GAAP Consolidated Totals
	(in millions)
Year Ended December 31, 2007    Net interest income	$7,100	$4,776	$(761)	$-	$11,115	$(1,383)	$124	$391	$10,247
Other operating income (Total other revenues)	(192)	3,793	2,138	(293)(1)	5,446	98	(237)	675	5,982
Loan impairment charges (Provision for credit losses)	7,695	3,873	(2)	4(2)	11,570	(1,185)	86	161	10,632
Operating expenses (Total costs and expenses)	2,462	2,437	6,093	-	10,992	14	(1,020)	757	10,743
Income tax expense (benefit)	(1,201)	823	(12)	(110)(3)	(500)	(25)	(387)	53	(859)
Income (loss) from continuing operations	(2,048)	1,436	(4,702)	(187)	(5,501)	(89)	1,208	95	(4,287)
Customer loans (Receivables)	117,464	49,733	159	-	167,356	(21,729)	84	5,142	150,853
Assets	113,675	48,931	27,614	(8,090)(4)	182,130	(20,955)	(5,841)	5,099	160,433
Intersegment revenues	211	71	11	(293)(1)	-	-	-	-	-
Depreciation and amortization	53	64	98	-	215	-	162	(37)	340
Goodwill	-	530	3,284	-	3,814	-	(1,259)	272	2,827
Expenditures for long-lived assets(7)	16	-	103	-	119	-	-	12	131
Year Ended December 31, 2006
Net interest income	$7,406	$4,333	$(743)(9)	$-	$10,996	$(1,257)	$(172)	$265	$9,832
Other operating income (Total other revenues)	367	2,902	714	(291)(1)	3,692	267	232	584	4,775
Loan impairment charges (Provision for credit losses)	4,353	2,129	(2)	6(2)	6,486	(653)	216	88	6,137
Operating expenses (Total costs and expenses)	2,431	2,409	587	-	5,427	(18)	(35)	637	6,011
Income tax expense (benefit)	351	961	(313)	(110)(3)	889	(98)	60	35	886
Income (loss) from continuing operations	638	1,736	(301)	(187)	1,886	(221)	(181)	89	1,573
Customer loans (Receivables)	126,552	46,366	193	-	173,111	(21,380)	(723)	3,867	154,875
Assets	127,329	47,845	29,235	(8,197)(4)	196,212	(21,930)	(5,695)	3,981	172,568
Intersegment revenues	206	56	29	(291)(1)	-	-	-	-	-
Depreciation and amortization	33	67	120	-	220	-	179	(21)	378
Goodwill	46	530	8,812	-	9,388	-	(3,049)	229	6,568
Expenditures for long-lived assets(7)	76	1	58	-	135	-	-	5	140
Year Ended December 31, 2005
Net interest income	$7,078	$3,473	$(807)	$-	$9,744	$(1,432)	$(659)	$275	$7,928
Other operating income (Total other revenues)	446	2,259	849	(140)(1)	3,414	417	(315)	627	4,143
Loan impairment charges (Provision for credit losses)	2,737	2,078	(41)	9(2)	4,783	(660)	(282)	243	4,084
Operating expenses (Total costs and expenses)	2,247	1,825	566	-	4,638	(22)	76	527	5,219
Income tax expense (benefit)	921	655	(360)	(54)(3)	1,162	(113)	(167)	46	928
Income (loss) from continuing operations	1,619	1,174	(123)	(95)	2,575	(220)	(601)	86	1,840
Customer loans (Receivables)	110,970	43,104	210	-	154,284	(21,655)	(3,674)	3,213	132,168
Assets	112,970	45,858	26,022	(8,219)(4)	176,631	(21,531)	(8,897)	3,214	149,417
Intersegment revenues	90	38	12	(140)(1)	-	-	-	-	-
Depreciation and amortization	40	29	137	-	206	-	237	(53)	390
Goodwill	-	521	8,812	-	9,333	-	(2,950)	229	6,612
Expenditures for long-lived assets(7)	23	526	39	-	588	-	1	9	598

	Net Interest Income	Other Revenues	Provision for Credit Losses	Total Costs and Expenses	Income Tax Expense (Benefit)	Income from Continuing Operations	Receivables	Total Assets
	(in millions)
Year Ended December 31, 2007
Securitizations	$(63)	$35	$3	$-	$(11)	$(20)	$(244)	$(495)
Derivatives and hedge accounting	280	(283)	-	-	-	(3)	-	(4,501)
Goodwill and intangible assets	-	-	-	(843)	(546)	1,389	-	(117)
Purchase accounting	47	28	66	(71)	101	(21)	31	284
Deferred loan origination costs and premiums	(161)	(7)	-	(153)	(6)	(9)	371	371
Credit loss impairment provisioning	(3)	13	22	36	(18)	(30)	(81)	(211)
Loans held for resale	57	(15)	-	3	15	24	6	(6)
Interest recognition	(17)	-	-	-	(7)	(10)	(78)	(78)
Other	(16 )	(8 )	(5 )	8	85	(112 )	79	(1,088 )
Total	$124	$(237 )	$86	$(1,020 )	$(387 )	$1,208	$84	$(5,841 )
Year Ended December 31, 2006
Securitizations	$(244)	$89	$25	$-	$(62)	$(118)	$(948)	$(905)
Derivatives and hedge accounting	(33)	277	-	-	90	154	-	(4,181)
Goodwill and intangible assets	-	(15)	-	179	(66)	(128)	-	(1,460)
Purchase accounting	197	64	195	(4)	30	40	120	(42)
Deferred loan origination costs and premiums	(144)	2	-	(198)	19	37	457	457
Credit loss impairment provisioning	(23)	(3)	(4)	-	(10)	(12)	(178)	(284)
Loans held for resale	125	(202)	-	(32)	(17)	(28)	(157)	38
Interest recognition	4	(23)	-	-	(9)	(10)	(61)	(61)
Other	(54 )	43	-	20	85	(117 )	44	743
Total	$(172 )	$232	$216	$(35 )	$60	$(181 )	$(723 )	$(5,695 )
Year Ended December 31, 2005
Securitizations	$(900)	$(145)	$(334)	$-	$(263)	$(448)	$(5,415)	$(6,563)
Derivatives and hedge accounting	(41)	(158)	-	-	(72)	(127)	-	(2,866)
Goodwill and intangible assets	-	(281)	-	272	(100)	(453)	-	(1,182)
Purchase accounting	363	224	51	(51)	161	426	169	(83)
Deferred loan origination costs and premiums	(183)	2	-	(176)	(2)	(3)	419	419
Credit loss impairment provisioning	(43)	34	(45)	-	15	21	(190)	(290)
Loans held for resale	126	(79)	-	44	1	2	-	-
Interest recognition	7	-	-	-	2	5	-	-
Other	12	88	46	(13 )	91	(24 )	1,343	1,668
Total	$(659 )	$(315 )	$(282 )	$76	$(167 )	$(601 )	$(3,674 )	$(8,897 )

	Net Interest Income	Other Revenues	Provision for Credit Losses	Total Costs and Expenses	Income Tax Expense (Benefit)	Net Income	Receivables	Total Assets
	(in millions)
Year Ended December 31, 2007
Private label receivables	$(1,329)	$86	$(1,120)	$15	$(34)	$(104)	$(19,256)	$(18,650)
Real estate secured receivables	(57)	12	(65)	(1)	8	13	(2,473)	(2,465)
Other	3	-	-	-	1	2	-	160
Total	$(1,383 )	$98	$(1,185 )	$14	$(25 )	$(89 )	$(21,729 )	$(20,955 )
Year Ended December 31, 2006
Private label receivables	$(1,179)	$251	$(631)	$(17)	$(84)	$(196)	$(18,145)	$(18,668)
Real estate secured receivables	(99)	16	(22)	(1)	(21)	(39)	(3,235)	(3,264)
Other	21	-	-	-	7	14	-	2
Total	$(1,257 )	$267	$(653 )	$(18 )	$(98 )	$(221 )	$(21,380 )	$(21,930 )
Year Ended December 31, 2005
Private label receivables	$(1,312)	$399	$(625)	$(22)	$(88)	$(178)	$(17,127)	$(16,973)
Real estate secured receivables	(155)	18	(35)	-	(37)	(65)	(4,531)	(4,556)
Other	35	-	-	-	12	23	3	(2 )
Total	$(1,432 )	$417	$(660 )	$(22 )	$(113 )	$(220 )	$(21,655 )	$(21,531 )

Year ending December 31,	Minimum Rental Payments	Minimum Sublease Income	Net
	(in millions)
2008	$150	$36	$114
2009	117	25	92
2010	84	15	69
2011	53	5	48
2012	27	2	25
Thereafter	67	-	67
Net minimum lease commitments	$498	$83	$415

	(in millions)
2008	$5
2009	11
2010	11
2011	11
2012	11
Thereafter	104
	$153

	Assets (Liabilities) Measured at Fair Value at December 31, 2007	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
	(in millions)
Risk management related derivatives, net(1)	$3,775	$-	$3,775	$-
Securities purchased under agreements to resell	1,506	1,506	-	-
Available for sale securities	3,152	267	2,885	-
Real estate owned(2)	1,151	-	1,151	-
Repossessed vehicles(2)	83	-	83	-
Long term debt carried at fair value	32,896	-	32,896	-

	Carrying Value(1)	Estimated Fair Value
	(in millions)
Assets:
Cash	$663	$663
Interest bearing deposits with banks	335	335
Securities purchased under agreements to resell	1,506	1,506
Securities	3,152	3,152
Consumer receivables:
Mortgage Services:
First lien	25,641	19,268
Second lien	4,649	2,609
Total Mortgage Services	30,290	21,877
Consumer Lending:
First lien	42,861	30,881
Second lien	6,292	3,229
Total real estate secured	49,153	34,110
Non-real estate secured	16,277	10,351
Total Consumer Lending	65,430	44,461
Credit card	27,637	30,081
Auto Finance	11,797	10,998
International receivables	4,983	5,238
Total consumer receivables	140,137	112,655
Receivables held for sale	80	80
Due from affiliates	634	634
Derivative financial assets	46	46
Liabilities:
Commercial paper, bank and other borrowings	8,399	8,399
Due to affiliates	11,359	10,944
Long term debt carried at fair value	32,896	32,896
Long term debt not carried at fair value	90,117	88,159
Insurance policy and claim reserves	998	986
Derivative financial liabilities	14	14

	Carrying Value	Estimated Fair Value
	(in millions)
Assets:
Cash	$738	$738
Interest bearing deposits with banks	188	188
Securities purchased under agreements to resell	171	171
Securities	4,319	4,319
Receivables	150,406	147,918
Receivables held for sale	1,741	1,741
Due from affiliates	547	547
Derivative financial assets	292	292
Liabilities:
Commercial paper, bank and other borrowings	11,021	11,021
Due to affiliates	10,887	11,023
Long term debt	127,347	128,737
Insurance policy and claim reserves	1,076	1,119
Derivative financial liabilities	6	6

State/Region	Percent of Total Domestic Receivables
California	12%
Midwest  (IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD, WI)	23
Southeast (AL, FL, GA, KY, MS, NC, SC, TN)	20
Middle  Atlantic  (DE, DC, MD, NJ, PA, VA, WV)	15
Southwest (AZ, AR, LA, NM, OK, TX)	11
Northeast (CT, ME, MA, NH, NY, RI, VT)	11
West (AK, CO, HI, ID, MT, NV, OR, UT, WA, WY)	8

State	Percent of Total Domestic Receivables
California	12%
Florida	7
New York	6
Ohio	5
Pennsylvania	5
Texas	5

	Identifiable Assets			Long-Lived Assets(1)
At December 31,	2007	2006	2005	2007	2006	2005
	(in millions)
Continuing operations:
United States	$154,931	$168,387	$145,938	$4,087	$8,985	$9,320
Canada	5,502	4,181	3,479	193	157	153
Total-continuing operations	160,433	172,568	149,417	4,280	9,142	9,473
Discontinued operations:
United Kingdom	5,211	6,709	7,019	70	513	464
Europe	83	89	229	-	-	3
Total-discontinued operations	$5,294	$6,798	$7,248	$70	$513	$467

	Revenues			Income Before Income Taxes
Year ended December 31,	2007	2006	2005	2007	2006	2005
	(in millions)
Continuing operations:
United States	$23,389	$21,148	$15,991	$(5,287)	$2,330	$2,672
Canada	739	601	450	141	129	96
Total-continuing operations	24,128	21,749	16,441	(5,146 )	2,459	2,768
Discontinued operations:
United Kingdom (1)	968	1,222	1,737	(710)	(170)	(100)
Europe (1)	-	32	31	5	(2 )	(5 )
Total-discontinued operations	$968	$1,254	$1,768	$(705 )	$(172 )	$(105 )

	Three Months Ended Dec. 31, 2007	Three Months Ended Sept. 30, 2007	Three Months Ended June 30, 2007	Three Months Ended Mar. 31, 2007	Three Months Ended Dec. 31, 2006	Three Months Ended Sept. 30, 2006	Three Months Ended June 30, 2006	Three Months Ended Mar. 31, 2006
	(in millions)
Finance and other interest income	$4,469	$4,571	$4,536	$4,570	$4,481	$4,392	$4,169	$3,932
Interest expense:
HSBC affiliates	212	192	182	192	269	231	124	105
Non-affiliates	1,732	1,780	1,787	1,822	1,730	1,645	1,580	1,458
Net interest income	2,525	2,599	2,567	2,556	2,482	2,516	2,465	2,369
Provision for credit losses	4,152	3,134	1,854	1,492	2,916	1,279	1,155	787
Net interest income (loss) after provision for credit losses	(1,627 )	(535 )	713	1,064	(434 )	1,237	1,310	1,582
Other revenues:
Securitization related revenue	12	16	21	21	21	24	51	71
Insurance revenue	106	127	118	116	118	128	100	119
Investment income	50	29	30	19	170	25	28	28
Derivative income (expense)	(20)	4	(43)	(9)	68	66	(9)	54
Gain (loss) on debt designated at fair value and related derivatives	742	519	(130)	144	-	-	-	-
Fee income	548	653	623	564	551	537	417	382
Enhancement services revenue	169	167	150	148	133	128	129	123
Taxpayer financial services income	31	(27)	4	239	1	4	19	234
Gain on receivable sales to HSBC affiliates	121	94	109	95	139	101	97	85
Servicing and other fees from HSBC affiliates	130	126	123	125	121	121	116	118
Other income	(6 )	(26 )	(88 )	38	(9 )	30	72	64
Total other revenues	1,883	1,682	917	1,500	1,313	1,164	1,020	1,278
Costs and expenses:
Salaries and fringe benefits	530	544	550	572	578	532	527	541
Sales incentives	25	51	59	65	82	92	96	79
Occupancy and equipment expense	127	66	73	67	67	68	65	71
Other marketing expenses	145	161	217	216	266	196	173	171
Other servicing and administrative expenses	491	278	191	172	287	201	168	193
Support services from HSBC affiliates	298	288	287	273	270	254	263	250
Amortization of acquired intangibles	64	63	64	62	63	63	63	80
Policyholders' benefits	47	64	56	64	63	72	57	60
Goodwill and other intangible asset impairment charges	3,632	881	-	-	-	-	-	-
Total costs and expenses	5,359	2,396	1,497	1,491	1,676	1,478	1,412	1,445
Income (loss) from continuing operations before income taxes	(5,103)	(1,249)	133	1,073	(797)	923	918	1,415
Income tax expense (benefit)	(1,098 )	(172 )	32	379	(297 )	331	336	516
Income (loss) from continuing operations	(4,005 )	(1,077 )	101	694	(500 )	592	582	899
Income (loss) from discontinued operations:
Income (loss) from discontinued operations	(417)	(31)	(57)	(200)	(89)	(45)	(22)	(16)
Income tax expense (benefit)	(14 )	(6 )	(19 )	(47 )	(26 )	(4 )	(7 )	(5 )
Loss from discontinued operations	(403 )	(25 )	(38 )	(153 )	(63 )	(41 )	(15 )	(11 )
Net income	$(4,408 )	$(1,102 )	$63	$541	$(563 )	$551	$567	$888