The messages on credit risk and capital management emanating from banks may have a tendency to be more contradictory than they already were. The Basel 2 regime for working out levels of regulatory capital is one of the reasons.The financial statements for Commonwealth Bank for the June 2008 year, published yesterday, help illustrate this theme.Buried deep in the appendices to the CBA profit is a breakdown of the bank's credit risks, by type of loan, for the purpose of calculating risk-weighted assets, and thus capital.On the surface, the trends in risk-weighted assets reported by the banks are a surprise.Credit risk assets for CBA increased only three per cent over six months to $187 billion. Risk-weighted assets (including market risk and a notional allowance for operational risk) increased by only four per cent over six months, to $206 billion.By contrast the bank's banking assets, on balance sheet, were $462 billion.Risk-weighted assets actually fell, marginally, in "SME corporate" and fell markedly in "SME retail", down 27 per cent over six months.And just to define these two terms, which may matter in the Basel 2 world, SME corporate covers businesses with revenues of less than $50 million and exposures of more than $1 million. SME retail covers businesses with exposures of up to $1 million not secured by residential property.Risk-weighted assets for project finance and certain real estate loans fell eight per cent.Loans to corporates and banks did increase by 12 per cent and 40 per cent respectively, both consistent with broader lending trends.The calculation of risk-weighted assets - which derives from a bank's APRA-approved models of risk measurement - matters, because this is, of course, the denominator used in working out capital ratios.So while it looks like CBA is being rather conservative by managing for higher than usual capital ratios, an alternative view is that the bank is being a little reckless, and grading business loans more favourably than economic conditions demand.