Fitch Upgrades Household International's Ratings to 'AA-/F1+'.

CHICAGO -- Fitch Ratings has upgraded the long-term and short-term ratings of Household International, Inc. (Household) and its subsidiaries. The senior debt rating has been upgraded to 'AA-' from 'A+' and the commercial paper rating has been upgraded to 'F1+' from 'F1'. The Rating Outlook is Stable. A complete list of Household's ratings is provided at the end of this release. Household is an indirect wholly owned subsidiary of HSBC Holdings plc (HSBC). HSBC's ratings ('AA' senior and 'F1+') are unaffected by today's upgrade.

In addition, Fitch anticipates that it will assign the same ratings to HSBC Finance Corporation that it assigns to Household, once this entity is formally established later this month. HSBC Finance Corporation will be created through the merger of Household and its primary operating subsidiary Household Finance Corporation.

Fitch's rating upgrade reflects HSBC's demonstrated commitment to Household through intercompany funding, renaming of finance subsidiary with the HSBC name and operational integration with HSBC over the past 12 months. The upgrade also takes into consideration the completion of the planned transfer of approximately $15 billion of managed credit card receivables in 2004 to HSBC Bank USA. The level and nature of the activity between HSBC and Household demonstrates a high degree of parent support and integration that warranted a closer linkage between the ratings of HSBC and Household. Further, the improvement in Household's funding sources has strengthened its own financial profile, which Fitch has recognized through the upgrading of the individual rating to 'B/C' from 'C'.

Funding over the past 12 months between HSBC and Household has shown increased integration between HSBC and Household. Total HSBC funding provided to Household has risen to $22.4 billion at Sept.30, 2004 from $14.7 billion at Dec. 31, 2003. As a percentage of total debt, HSBC funding has risen to 21% at Sept. 30, 2004 from 15% at Dec. 31, 2003. The planned transfer of approximately $15 billion of credit card receivables to HSBC Bank USA further demonstrates HSBC's ability and willingness to use its liquidity to fund operations and growth. 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.

On Nov. 12, 2004, Household filed 8-K's for both Household International and Household Finance Corporation in which they announced their intentions to merge Household Finance Corporation (HFC), a wholly owned subsidiary and the holding company for Household's U.S.-based consumer finance operations, with and into Household, with Household as the surviving entity. At the time of merger, Household will change its name to 'HSBC Finance Corporation.' After completion of the merger, all outstanding obligations of HFC will continue as obligations of Household. The company currently anticipates that the merger will be completed in December 2004. The renaming of Household to HSBC Finance Corporation further demonstrates the importance of the company to the overall HSBC enterprise.

Household's operating performance for the nine months ended Sept. 30, 2004 was impacted by reduced securitization revenue and increased operating costs offset by funding benefits. Net income increased to $1.20 billion for the nine months ended Sept. 30, 2004 from $1.09 billion for the comparable period in 2003. Lower yields due to a higher level of near prime receivables could impact near-term profitability, but improvement in credit costs and operating efficiencies will likely offset any impact.

Asset quality performance has shown good improvement over the past year as Household increases the volume of near prime customers in their portfolio. Annualized net losses to average managed receivables declined to 4.61% for the nine months ended Sept. 30, 2004, from 4.77% for the comparable period in 2003. Given the decline in delinquencies to 4.59% of managed receivables at Sept. 30, 2004 from 5.36% in 2003, Fitch would expect losses to continue to improve from the present levels. In addition, the increase in near prime customer balances should help improve asset quality performance in the long term.

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. Household's risk based capital is adversely affected by 'push down accounting' as goodwill and acquired intangibles amounted to $9.5 billion at Sept. 30, 2004, mainly due to the acquisition by HSBC. Following the transfer of credit card receivables to HSBC Bank USA, capitalization metrics are expected to remain at levels pre-transfer.

Rating actions in respect of Household and its subsidiaries:

Household International, Inc.

Upgraded:

-- Senior debt to 'AA-' from 'A+';

-- Subordinated debt to 'A+' from 'A';

-- Preferred stock to 'A+' from 'A';

-- Individual to 'B/C' from 'C';

-- Commercial paper to 'F1+' from 'F1'.

-- Rating Outlook Stable

Affirmed:

-- Support '1'

Household Finance Corp.

Upgraded:

-- Senior debt to 'AA-' from 'A+';

-- Subordinated debt to 'A+' from 'A';

-- Preferred stock to 'A+' from 'A';

-- Individual to 'B/C' from 'C';

-- Commercial paper to 'F1+' from 'F1'.

-- Rating Outlook Stable

Affirmed:

-- Support '1'

Household Capital Trust I-VII

Upgraded:

-- Preferred stock to 'A+' from 'A'.

-- Rating Outlook Stable

Household Bank (Nevada) N.A. **

Upgraded:

-- Senior debt to 'AA-' from 'A+';

-- Short-term debt to 'F1+' from 'F1'.

-- Individual to 'B/C' from 'C';

-- Rating Outlook Stable

Affirmed:

-- Support '1'

Household Bank International Netherlands BV

Upgraded:

-- Senior notes* to 'AA-' from 'A+'.

-- Rating Outlook Stable

Household Financial Corp., Ltd.

Upgraded:

-- Senior debt** to 'AA-' from 'A+';

-- Senior debt shelf** to 'AA-' from 'A+'.

-- Rating Outlook Stable

HFC Bank plc * **

Upgraded:

-- Euro medium-term notes to 'AA-' from 'A+'

-- Guaranteed deposit programme: long-term to 'AA-' from 'A+';

-- Commercial paper to 'F1+' from 'F1';

-- Guaranteed deposit programme: short-term to 'F1+' from 'F1'.

-- Rating Outlook Stable

Affirmed:

-- Individual 'B';

-- Support '1';

* Guaranteed by Household International, Inc. ** Guaranteed by Household Finance Corp.