HSBC smashed the record for annual profits by a UK bank yesterday when it announced earnings of £11.91bn for last year.

The figure was 11 per cent higher than the previous year after its core businesses in the UK, US and Hong Kong produced "robust performances".

But charges for bad loans rose by £914.9m during the year and came against a backdrop of rising personal bankruptcies in the UK, which generates about a fifth of HSBC's earnings.

Announcing total impairment charges of £4.43bn across its global operations, HSBC said action taken to tackle bad debts in the UK began to have a positive effect during the final six months of last year.

The results come a week after Royal Bank of Scotland announced profits of £8.25bn before accounting for one-off items, while Lloyds TSB and Barclays have also cheered the City with bumper earnings.

Dyfrig John, chief executive of HSBC Bank, which operates in the UK and other countries in Europe, including France, said profits at his operation advanced by 28 per cent.

UK profits from personal financial services rose 24 per cent and included contributions from M&S Money, which was sold by retailer Marks & Spencer when it fought off a £9.1bn takeover campaign from retail tycoon Philip Green in 2004, and First Direct.