Pre-tax profits - including exceptional items - were $4.24bn (Â£2.76bn), down 30% on 2013, the bank said.
Board directors have decided to forego their bonuses as a result.
The news comes a week after the bank announced that chief executive Peter Sands would be replaced by ex-JP Morgan banker Bill Winters.
Losses from bad loans increased to $2.14bn, up from $1.62bn, while operating income fell 2% to $18.23bn.
Mr Sands said: "2014 performance was disappointing, impacted by a challenging market environment and by the significant programme of restructuring and repositioning actions taken during the year.
"We faced a perfect storm: negative sentiment towards emerging markets, a sharp drop in commodity prices, persistent low interest rates and surplus liquidity, low volatility, and a welter of regulatory challenges."
In August 2014, Standard Chartered agreed to pay a $300m fine relating to its poor money laundering surveillance systems.
The bank has been facing tough market conditions for some time and has issued three profit warnings in the past 12 months.
As part of a $400m cost-cutting programme, the bank is jettisoning 15 "underperforming and non-strategic businesses", it said.
Mr Sands had been under pressure over the bank's slumping share price.
Standard Chartered's chairman Sir John Peace is to step down in 2016 and three non-executive directors are also leaving.
The bank's shares were up nearly 6% in morning trading as shareholders responded well to the bank's recovery plan.
But the share price is still nearly 20% lower than it was a year ago.
UK bank Standard Chartered has reported a steep fall in full-year profits, compounding recent troubles for the emerging-markets focused bank.