HSBC chief executive Stuart Gulliver has admitted the banking giant "disappointed" last year after its annual profits slumped 17 per cent.

The company still racked up a pre-tax profit of $18.7 billion (€16.5 billion) for 2014 but this was short of analsyt expectations and led to a 3 per cent slide in HSBC’s share price in early trading.

The results were announced as Mr Gulliver was dragged into the ongoing furore over the bank’s tax activities following the disclosure that he has a bank account in Switzerland to hold bonus payments.

HSBC said he opened the account in 1998 when he was living and working in Hong Kong and full tax was paid in Hong Kong on the bonus payments. Mr Gulliver has voluntarily declared his Swiss account to UK tax authorities for a number of years.

The group has been mired in allegations that its Swiss private banking subsidiary helped thousands of wealthy clients avoid tax.

Mr Gulliver has already admitted in a memo to staff on the “painful” tax avoidance allegations that the bank “sometimes failed to live up to the standards” expected by society.

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 £216 million fine from the UK's Financial Conduct Authority relating to HSBC's failure to prevent the rigging of foreign exchange operations.

Mr Gulliver admitted that 2014 had been a challenging year, with profits down due to a number of one-off factors including the settlement of regulatory fines.

He added: “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.”

PA