SOLVED: its a known fault with 12.2.1. RPi5 firmware fails to init HDMI audio.
FIX:
Reset the Pi’s firmware and HDMI state.
- Power off the Pi
- Remove the SD card
- Power on the Pi (let it boot to the “no OS” screen)
- Power off again
- Reinsert SD card
- Boot normally
Then go to "Setting->System->Audio output device" and reselect HDMI device.
Done. Worked for mine.