Shares in Barclays (LON:BARC) plunged 10.5% as it fell into the red, cut its dividend and warned on the outlook.
The stock backtracked 18.1p to 153.9p, having been briefly halted after dropping as low as 152.8p during the morning.
Barclays announced a 2% fall in adjusted pre-tax profit to £5.4bn and an 8% drop to £2.07bn on a statutory basis in the year to December 31 against a year earlier.
After tax, the group made a net loss of £394mln against losses of £174mln a year ago.
The bank warned that it was not expecting the first quarter in its investment banking arm to match a strong showing last year due to current markets.
Augustin Eden at spread-betting firm Accendo Markets noted the lower earnings, but added: "Much more immediate is the outlook, and by Barclays’s own admission it isn’t bright."
The bank plans to slim down into two businesses including a ringfenced UK bank including retail banking, consumer credit cards, UK-based wealth operations and corporate banking for smaller businesses, by 2019.
The other division will focus on corporate and investment banking, US and international cards, international wealth operations and payments.
It also confirmed that it plans to sell its 62.3% interest in its African business, Barclays Africa Group Ltd (BAGL) in the coming two to three years, subject to shareholder and regulatory approvals if and as required.
The bank said litigation and conduct charges rose 56% to about £4.4bn as it took £1.45bn of extra payment protection insurance (PPI) provisions in the fourth quarter.
Total provisions for customer compensation in 2015 were £2.8bn against £1.1bn last time of which £2.2bn were for PPI.
It made extra provisions of £167mln for ongoing investigations and litigation including foreign exchange in the fourth quarter, including the settlement reached with the New York Department of Financial Services in November over an investigation into electronic forex trading.
Barclays cut its proposed dividend in 2016 and 2017 to 3p from the 6.5p paid in 2015.
The group also said it had cut its workforce by 5,700 since new chief executive Jes Staley arrived.
It added that it was not worried about its exposure to the ailing oil & gas sector and low oil prices since it mainly involved large oil majors and investment-grade companies.
Staley told broadcaster CNBC: "We'll be continuing to reduce headcount at a measured pace and we're on target to get it to a manageable level."
He added: "We have a great core business at Barclays and our challenge is to wind down our non-core business and we need to put our conduct and litigation issues behind us.
"We're cutting our dividend for a very simple reason - we need to accelerate the closure of our non-core business."