(Bloomberg) -- HSBC Holdings Plc, struggling to contain a scandal over tax evasion at its private bank, posted lower-than-expected full-year profit as costs rose and investment banking earnings tumbled.

Pretax profit fell 17% to $18.7 billion, London-based HSBC said Monday. That missed the $21.5 billion average estimate of 19 analysts surveyed by Bloomberg.

Chief Executive Officer Stuart Gulliver scrapped four-year-old profitability targets Monday, blaming regulatory burdens. His efforts to spend billions on compliance and revive profit were eclipsed this month by a report from the International Consortium of Investigative Journalists showing details of how HSBC handled Swiss accounts for tax evaders and criminals.

“It’s all pretty grim reading,” said Gary Greenwood, an analyst at Shore Capital Group Ltd. in Liverpool, England, with a hold rating on the stock. “The numbers themselves are pretty rubbish, as costs are going up higher than revenues. With the negative headlines they’re getting elsewhere at the moment, this certainly doesn’t help.”

Shares of Europe’s largest bank slid 6% at 10:30 a.m. in London, the most since November 2011. The stock is down 6.5% this year after dropping 8.1% in 2014.

Investment bank earnings fell 38% to $5.9 billion, exceeding the 23% drop estimated by 16 analysts surveyed by the bank. HSBC set aside $809 million in relation to investigations into a probe related into foreign-exchange manipulation in the fourth quarter.

Chairman Douglas Flint, 59, is giving evidence to the U.K. Parliament on Wednesday following the investigative journalists’ report. The Guardian newspaper yesterday said Gulliver had his own Swiss bank account, used to hold bonuses, and that the CEO was officially domiciled in Hong Kong. HSBC said Gulliver paid taxes on the Swiss account and has paid U.K. taxes on his earnings globally since moving to Britain in 2003.

“There’s nothing Stuart has done that’s not totally legal and transparent,” Flint told reporters on a conference call, when the two executives were asked about the Guardian article.

HSBC’s dividend for the year was 50 cents, compared with 49 cents a year earlier. The company’s common equity tier 1 ratio, a measure of financial strength, fell to 11.1% at the end of the fourth quarter from 11.4% at the end of the third quarter.

“Capital has really gone backwards, the dividend is weaker than expected and global banking and markets had a tough fourth quarter,” said Mike Trippitt, an analyst at Numis Securities Ltd., referring to the unit housing HSBC’s investment bank. The London-based analyst has an add rating on the stock.

Return on equity, a measure of profitability, fell to 7.3 percent in 2014 compared with 9.2% a year earlier. HSBC said it’s targeting return on equity to exceed 10%, compared with the 12% to 15% range set in 2011, when Gulliver took over as CEO. Operating costs climbed 6.1% to $37.9 billion.

“Whilst we expected an increase in the amount of capital we were required to hold when setting targets for the group in 2011, we could not have foreseen the full extent of the additional costs and capital commitment that would subsequently be asked of us,” HSBC said. “Some of the targets that we set for the group in 2011 are no longer realistic.”

The investment bank “suffered a poor fourth quarter,” said Gulliver, who has exited 74 businesses since 2011. “2014 was a challenging year in which we continued to work hard to improve business performance while managing the impact of a higher operating cost base.”

Conduct fines, settlements, customer redress and associated provisions cost the bank $3.7 billion in 2014, the company said. Settlements and provisions for currency-rigging investigations were $1.2 billion, while U.K. customer redress program expenses rose to $1.28 billion from $1.24 billion in 2013.

HSBC said in the statement that “recent disclosures around unacceptable historical practices and behavior within the Swiss private bank remind us of how much there still is to do.” It’s also a reminder of the “need for constant vigilance over the effectiveness of our controls and the imperative to embed a robust and ethical compliance culture.”

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