HSBC has revealed that annual profits more than doubled in 2021 but that it is battling challenges on several fronts in its key Chinese market.

The Asia-focused but UK-based bank warned that China’s ‘zero-COVID’ measures to control the disease in Hong Kong were hurting the economy.

It added that the restrictions, aimed at curbing the Omicron variant, may affect its ability to attract and retain staff in the financial hub.

HSBC said it had also taken a credit charge of $500m in the final quarter of 2021 – partly a consequence of China’s continuing real estate crisis.

But the charge only took some of the gloss off its annual performance.

HSBC reported pre-tax profits of $18.9bn (£13.9bn) compared to $8.8bn during 2020 when pandemic restrictions took a greater toll on the bank’s fortunes because of its exposure to Asia which accounts for a majority of revenue and profits.

The bank said it had released $900m in cash it had put aside in case pandemic-related bad loans spiked.

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It had taken a charge of $8.8bn against expected losses last year.

Government support packages are believed to have shielded banks from the worst of the fallout.

HSBC said its UK arm recorded a leap in profits to $4.8bn during 2021 following earnings of $300m over the previous 12 months.

The bank said continuing economic recovery in most territories and rising interest rates would support profitability in the current year.

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It said that if central bank interest rates rise worldwide as expected, the resulting improvement in its lending margins would mean it hits its goal of a double-digit return on equity in 2023, a year earlier than expected.

HSBC said it would buy back up to $1bn of its shares after the conclusion of an existing $2bn buyback programme.

Chief executive Noel Quinn said: “We made good progress against our strategy in 2021, which contributed to a strong financial performance that was supported by the global economic recovery.

“All of our regions were profitable and we saw growth in the fourth quarter of 2021 in many of our business lines.

“We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy. We also remain cognisant of the potential impact that further COVID-19-related uncertainty and continued inflation might have on us and our clients.”

The bank called out COVID curbs in Hong just days after Bill Winters, chief executive of rival Standard Chartered, said the city’s travel restrictions could hurt its status as a financial hub.

Daily infections numbers in Hong Kong have risen sharply this year, reaching a record 7,533 cases on Monday, overwhelming the government’s testing, hospital and quarantine capacities.

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