Barclays has set aside an extra £750 million for potential fines arising from allegations of manipulation in the foreign exchange market as the British bank’s annual profits rose a higher-than-expected 12 per cent thanks to a sharp cut in costs.

Barclays said yesterday it made a 2014 adjusted pretax profit of £5.5 billion, up from a restated £4.9 billion in 2013 and above the average analyst forecast of £5.3 billion.

The adjusted figure does not include the additional provisions for litigation which rose 250 per cent over the year to £1.7 billion. Separately, Barclays set aside an extra £200 million in the fourth quarter to compensate UK customers who were mis-sold insurance products.

Barclays pulled out of settling allegations its traders tried to rig foreign exchange benchmarks in a deal between US and UK authorities and six rival banks in November because it had not reached a deal with New York’s regulator. Chief executive Antony Jenkins signalled yesterday that a resolution may come this year.

“Resolving these issues is an important part of our plan for Barclays and, although it may be difficult, I expect that we will make significant progress in this area in 2015,” Jenkins said.

“I regard the behaviour at the centre of these investigations as wholly incompatible with our values, and I share the frustration of colleagues and shareholders that matters like these continue to cast a shadow over our business.”

Jenkins, who has pledged to overhaul Barclays’ culture and reduce its reliance on investment banking, took an annual bonus of £1.1 million and also a role-based allowance of close to £1 million for 2014, the first time he has accepted a bonus since he was appointed CEO in 2012. He was paid £5.5 million in total, up from £1.6 million in 2013.

Pretax profits at the investment bank dropped by a third due to weak trading income but the bank said it had a good start to 2015.