Fitch Ratings Revises Household International's Rating Outlook to Positive.

Business Editors

CHICAGO--(BUSINESS WIRE)--April 20, 2004

Fitch Ratings has revised Household International, Inc. (Household) Rating Outlook to Positive from Stable and raised the support rating to '1' from '2'. In addition, Fitch affirmed the 'A' senior long-term and 'F1' commercial paper ratings. Household operates as an indirect wholly owned subsidiary of HSBC Holdings Plc (HSBC). HSBC's ratings currently are 'F1+/AA-'. A complete list of Household's ratings are at the end of the press release.

Fitch's support rating revision reflects HSBC's demonstrated commitment to Household through intercompany funding and operational integration with HSBC over the past twelve months. The continued support by HSBC could result in closer alignment of ratings between HSBC and Household. The resolution of the Rating Outlook will be driven by the completion of the planned transfer of approximately $25 billion of managed credit card receivables in 2004 to HSBC Bank USA and the resulting capital plans going forward for Household, in conjunction with HSBC.

Events over the past twelve months between HSBC and Household have shown increased integration between HSBC and Household. Household has recognized funding and liquidity benefits of approximately $14.7 billion since the acquisition by HSBC. Household's funding has improved through the issuance of approximately $7.6 billion of debt to HSBC subsidiaries as of Dec. 31, 2003. In addition, through Household's Euro-CP program, HSBC's private banking customers have acquired commercial paper of approximately $2.8 billion. Household has completed an asset transfer of approximately $3 billion of real estate secured receivables to HSBC Bank USA on Dec. 31, 2003 that further shows their ability to use HSBC's liquidity to partially fund operations. The ability to use liquidity at HSBC has improved Household's funding costs in comparison to last year and has demonstrated support by HSBC to Household.

Household's performance for 2003 was impacted by the HSBC acquisition related costs and increased credit provisioning offset by funding benefits. Net income increased to $1.67 billion for the year-ending Dec. 31, 2003 from $1.56 billion for the comparable period in 2002. Credit costs could pressure near-term profitability, but improved funding costs and operating efficiencies will likely offset any impact.

Asset quality performance has weakened over the past year as the higher risk consumer that Household serves continues to exhibit stress. Annualized net losses to average managed receivables increased to 4.67% for the year-ended Dec. 31, 2003, from 4.28% for the comparable period in 2002. Given the increase in delinquencies to 5.39% of managed receivables for the year-ended Dec.31, 2003 from 5.24% in 2002, Fitch would expect losses to rise from the present levels. The delinquency ratio was impacted negatively by the sale of the real estate secured recievables to HSBC. In addition, the company continues to actively use its reaging practices to better serve its customer base which also positively influences asset quality ratios.

Capitalization, both on an absolute and risk-adjusted basis, is low and reflected in the individual rating. However, capitalization at the Household level viewed in conjunction with HSBC is adequate for the rating category. In accordance with guidelines for accounting for business combinations, the purchase price paid by HSBC plus related purchase accounting adjustments have been 'pushed-down' and recorded in HI's financial statements for the period subsequent to March 28, 2003. HI's risk based capital was adversely affected by the effects of the 'push down accounting' as goodwill and acquired intangibles increased by approximately $8 billion to $9.5 billion at Dec. 31, 2003 from $1.5 billion in 2002.

Ratings Affirmed and Rating Outlook Revised to Positive:

Household International, Inc.

-- Senior debt 'A';

-- Subordinated debt 'A-';

-- Preferred stock 'A-';

-- Individual 'C';

-- Commercial Paper 'F1'.

-- Rating Outlook 'Positive'

Household Finance Corp.

-- Senior debt 'A';

-- Subordinated debt 'A-';

-- Preferred stock 'A-';

-- Individual 'C';

-- Commercial paper 'F1'.

-- Rating Outlook 'Positive'

Household Capital Trust I-VII

-- Preferred stock 'A-'.

-- Rating Outlook 'Positive'

Household Bank (Nevada) N.A. (2)

-- Senior debt 'A';

-- Short-term debt 'F1'.

-- Individual 'C';

-- Rating Outlook 'Positive'

Household Bank International Netherlands BV

-- Senior notes(1) 'A'.

-- Rating Outlook 'Positive'

Household Financial Corp., Ltd.

-- Senior debt(2) 'A';

-- Senior debt shelf(2) 'A'.

-- Rating Outlook 'Positive'

HFC Bank plc (1)(2)

-- Euro medium-term notes 'A';

-- Commercial paper 'F1';

-- Individual 'B';

-- Support '1';

-- Guaranteed Deposit Programme: Short-term 'F1', Long-term 'A'.

-- Rating Outlook 'Positive'

Note (1): Guaranteed by Household International, Inc.

Note (2): Guaranteed by Household Finance Corp.

Support Ratings raised to '1' from '2':

Household International, Inc.

-- Support '1'.

Household Finance Corp.

-- Support '1'.

Household Bank (Nevada) N.A. (2)

-- Support '1'.