London (BBN)-HSBC, the global bank currently at the centre of a tax scandal, has blamed a 17% fall in annual profits on the cost of past mistakes.
The London-listed group said reported profit before tax fell to $18.68bn (£12.14bn) in 2014 and it reflected “lower business disposal and reclassification gains and the negative effect, on both revenue and costs, of significant items including fines, settlements, UK customer redress and associated provisions”, reports The sky News.
The explanation reflected the continued cost on the industry of a number of scandals, including the mis-selling of payment protection insurance (PPI).
The results were announced just hours after HSBC’s chief executive Stuart Gulliver, who has vowed to reform the bank in the wake of allegations of complicity in tax evasion at its Swiss arm, was dragged into a tax row himself.
Mr Gulliver, who denies any wrong-doing in connection with his own Swiss-based account, said he was “disappointed” in the group’s performance in 2014.
“Profits disappointed, although a tough fourth quarter masked some of the progress made over the preceding three quarters.
“Many of the challenging aspects of the fourth-quarter results were common to the industry as a whole.”
Banks have not only been negotiating the effects of record-low interest rates but also uncertainty over the global economy.
In relation to the Swiss tax scandal, HSBC chairman Douglas Flint said the bank needed to reinforce controls and demonstrate their effectiveness.
He added: “We deeply regret and apologise for the conduct and compliance failures highlighted, which were in contravention of our own policies as well as expectations of us.”
The bank was also the subject of a £216m fine from the Financial Conduct Authority relating to HSBC’s failure to prevent the rigging of foreign exchange operations.