St George Bank set the bar for bank earnings on Tuesday when it said it was on track to report earnings growth of eight to 10 per cent for the year to September. And last week Westpac's Gail Kelly told analysts her bank would report cash earnings growth of six to eight per cent for the full year.Using those forecasts as a benchmark, Commonwealth Bank's report yesterday of a three per cent increase in cash earnings per share for the 2007-08 financial year was well below par. But CBA chief executive Ralph Norris made it clear in his briefings to analysts and the media that the bank was playing safe, making sure the bank had a strong capital position, putting aside extra collective provisions in case of any future loss and having plenty of liquid assets on hand to deal with contingencies.Norris's presentation was peppered with references to "these volatile times" and "difficult market conditions".This prudence will not translate into investor returns in the short term, but in the coming year as the global credit crunch subsides and conditions return to normal the market can expect to see the bank release some of that capital for acquisition and development.Norris said as much yesterday. He sees a fundamental change in the financial services landscape, with the withdrawal of most of the non-bank lenders. He believes conditions are good for a big bank like Commonwealth. The bank has increased its market share in areas such as home loans and deposits and Norris expects that trend to continue. He said the bank was working on a number of "strategies and initiatives" to keep the momentum going.With no problem exposures of the type that are plaguing ANZ and National showing up in this result and plenty of capital in reserve to take advantage of growth opportunities, Norris believes the Commonwealth is set up for strong medium-term growth.Commonwealth Bank reported net profit after tax of $4.79 billion, an increase of seven per cent over the 2007 result. On a cash basis, after subtracting the $295 million earned from selling shares into the Visa initial public offering, earnings were up five per cent on the previous year. The dividend per share of $2.66 was up only four per cent on the 2007 payout.The bank's return on equity slipped from 21.7 per cent last year to 20.4 per cent and its revenue growth of 10 per cent was just ahead of expense growth of nine per cent.Commonwealth chief financial officer David Craig said expenses growth was high but it included costs associated with the acquisition of the broker IWL and investments in Asia. Craig said: "Income is not likely to grow at the same rate next year. We have a cost management program in place and we are confident we can delivery positive jaws (the gap between income and expense growth)."Loan impairment took a big bite out of earnings. The charge for bad and doubtful debts rose from $434 million in 2007 to $930 million for the