Credit losses "to double in 2020" is the cautious headline and lowball estimate from S&P Global Ratings in an appraisal yesterday on the impact on banking from the social and financial contagion redefining the Australian economy."We estimate that COVID-19 will contribute to the Australian banks' credit losses nearly doubling in 2020--to about 30 basis points of gross loans and advances--from historic lows in 2019," S&P said.Fitch Ratings in a commentary left out specifics on loss levels."The rapid development of the COVID-19 outbreak adds further uncertainty to the system and downside risk for bank ratings [with] the impact of the pandemic on Australian banks felt mostly through asset-quality and earnings pressure. "We expect the direct impact to be manageable for Australian banks, and felt mainly in weaker loan quality in highly affected sectors such as tourism, education, discretionary retail and some commodities. "However, second-order impacts from a weaker economy, rising unemployment, low confidence and higher market volatility could result in broader and more sustained asset-quality pressure.Mathew Wilson, banking analyst at Evans and Partners, in a report yesterday modelled the likely level of non-performing loans at major banks in a "broad based bad debts scenario".During the recession of the early 1990s "the credit cycle NPLs peaked at 11.2 per cent," Wilson said."Credit cycles come and go with risk generally re-priced back to rational levels. Bad debt recognition will also lag the market. However, very low interest rates and unconventional monetary policy lingers and hence is more sustainably damaging to bank revenue generation and dividend capacity and thus valuation," he wrote.Wilson estimated the NPL ratio across the Big Four banks at an average near 6 per cent, with ANZ and NAB (which have proportionally smaller consumer portfolios) with NPL ratios in the order of 5.9 per cent, while CBA and Westpac can expect NPLs around 6.2 per cent.Cynical thinking is exacerbating by the hour lately. Yesterday's highlight was the drastic capacity cuts announced by Qantas, followed by a A$715 million government handout to airlines in the form of refunds on Airservices charges and waivers of fuel excise.The Household Spending Intentions series released by Commonwealth Bank shows a sharp declines in entertainment and travel, the gloom offset by lingering wealth effects from the late 2019 revival in housing prices, which will surely reverse.Business confidence is reeling. "A majority of Australian businesses say we're in recession" was the summary of a Roy Morgan Snap SMS Survey of 621 Australian businesses yesterday."Businesses of all sizes agree" and "most industries agree" Roy Morgan said, including those in finance, insurance, property and business services.