CBA expects bad debts will be worse elsewhere 14 February 2008 5:53PM Ian Rogers Commonwealth Bank stated its earnings outlook in terms relative to the earnings growth of other major banks.CBA said it "believes that it should continue to deliver EPS growth which meets or exceeds the average of its peers", a formula that leaves plenty of flexibility and a degree of confusion for outsiders.A more telling measure of what this means, and what's going on in the banking industry, came through the efforts of Deutsche Bank analyst Ross Jones at yesterday's investor briefing to solicit clarification on the meaning of this outlook statement.CBA chief executive Ralph Norris suggested the earnings profile of other banks (that is, ANZ, NAB and Westpac) may not be too hot and specifically mentioned the likely experience of the bank's peer group relating to bad debt charges.Big banks tend to know a lot of detail about the problem loan exposures of each other (given that most loans are as part of clubs or syndicates) so Norris may have a detailed analysis of the forthcoming loan write-downs elsewhere in the industry.Forecasts for credit growth prepared by the bank's economics team project that most of the impact from the turn of the credit cycle, in terms of demand for credit, will be in the consumer sector.CBA expects growth in business credit to consolidate at a little under 20 per cent in the 2008 financial year and to pull back to growth of between 13 per cent and 15 per cent the following year. The bank expects housing credit growth to moderate next year to growth of between 10.5 per cent and 12.5 per cent, and also expects growth in other consumer credit to halve over the next two years.