HSBC Holdings Plc apologised and said it deeply regretted past conduct and compliance failures at its Swiss private bank as it reported a 17 per cent drop in annual profit on Monday.

Europe's biggest bank said recent disclosures about past practices and behaviour at its Swiss private bank - where it has been accused of helping clients dodge taxes - reminded it of "how much there still is to do" at the bank.

"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 said.

Cuts RoE target

HSBC said it was cutting its target for return on equity to "more than 10 per cent". The previous target was to exceed 12 per cent, and RoE fell to 7.3 per cent in 2014 from 9.2 per cent in 2013.

It reported a pretax profit of $18.7 billion for 2014, down from $22.6 billion the year before and below the average analyst forecast of $21 billion, after costs rose more than expected and its investment bank had a grim fourth quarter.

Underlying operating expenses were $37.9 billion in 2014, up 6.1 per cent from the year before, showing the struggle HSBC chief executive Stuart Gulliver was having to lower costs in the face of tougher regulation and the need for more compliance staff. That continues to depress returns.

HSBC's annual report also released on Monday showed Gulliver was paid 7.6 million pounds ($11.7 million) for 2014, down from 8 million pounds in 2013 but still likely to be one of the highest pay packets for a European bank executive.

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