POWERPOINT on, the familiar voice and dress; from a distance, it might have looked like any profit party.
But this week's Commonwealth Bank interim result was different because of what was said — bad debts were mounting quickly on the balance sheet of Australia's biggest bank — and because of what was not said.
No one uttered the phrase that had become standard rhetoric over recent years whenever banks deliver their numbers. No one said: "As good as it gets."
For those whose money depends on debts being repaid, things have been as good as they get for a long, long time. Chief executives from John McFarlane (ANZ) to Allan Moss (Macquarie) had made "as good as it gets" their profit-season catchcry.
But CBA's Ralph Norris couldn't say it. The charts did not merit it. The phrase went unheard.
Banks are finding that when things cannot get better, they inevitably get worse.
Real, calculable fear has hit the Australian banking sector. Rising interest rates and weaker investment markets are finally driving companies to the wall. Analysts are lining up to cut earnings estimates across the banks. Talk has begun to circulate of huge write-downs to come.
Next to the standard metrics, other numbers are being mentioned — numbers such as 2001, 1996, 1992.
Those years stand as peaks in the bad-debt landscape; 1992 as the worst year of the last recession. That their memory is being invoked means people who make their millions watching the banks for signs of stress are sensing trouble.
Analysts are calling an end to the Goldilocks years, when everyone could meet their bills, and the beginning of something more dangerous. The fear is worsened because no one can say how bad things might get.
"No one knows how this cycle will look," writes Westpac chief economist Bill Evans in an email. "The credit crisis is worsening and a continuation of that trend would stress highly geared companies."
It is easy to carve out a doomsday scenario where debts start falling over. Australian companies are thought to have learnt the perils of debt in the commercial property crash of the 1990s. Yet CBA's troubles are tied up with corporate loans.
Its book includes Centro, MFS and Allco, all of which have become market pariahs in the subprime shake-out.
Households, on the other hand, have spent the interim ratcheting their debt ever higher. That means mums and dads could make up more of the failing loans than in previous episodes of bad-debt cycles.
And the forecast for more interest rate rises just keeps extending. At least two and maybe three increases are tipped from the Reserve Bank, and Mr Norris will not commit the bank to limiting rate rises to those the central bank hands down.
"It would be reasonable to expect that the distribution of defaults and bad debts would be more tilted towards the household sector than was the case last time," ANZ chief economist Saul Eslake said. But everyone knew "as good as it gets" could not last forever, and there were bright spots in the CBA result — even in credit. Arrears were down on credit cards and home loans.
Mr Evans is optimistic. He says continuing problems in the US "will have limited impact on Australia because of the resilience of the emerging world".
That argument continues to have merit, and has been published on these pages, but the question is increasingly being asked: how limited is "limited"?
UBS estimates the percentage of loans at Australian banks that will end as bad and doubtful debts will climb to 0.26% by next year.
UBS shows bad and doubtful debts — that is, debts the bank is either certain will never be paid or uncertain will ever be paid — made up just 0.16% of interest-earning assets in 2006.
That year is looking to have been the bottom of a bad-debt cycle that had been falling since 2001, when the "tech wreck" pushed bad and doubtful debts to 0.36% of assets.
The figures may seem low to laymen, but the change is substantial; one that is already starting to hit businesses and could push households to the wall.
JPMorgan analyst Brian Johnson says a movement of 0.01 of a percentage point on CBA's bad and doubtful debts ratio equates to 0.7% of earnings per share. CBA's reported 0.04 of a percentage point increase — from 0.16% to 0.2% in this week's profit — shaved 3% from JPMorgan's earnings target for CBA.
"A lot of people will tell you you don't get an asset quality crisis until the economy slows," Mr Johnson said. "If you go back to what causes these bubbles, it's not the economy slows, it's that the economy slows after the bubble is pricked."
When interest rates started climbing in 1988, it hurt commercial property prices. Investors stopped giving credit, commercial prices fell and the country ended in recession.
In the mid-'90s, high domestic interest rates meant businesses in growing Asian economies decided to go to the US to borrow at a lower rate.
When the defaults began, inevitably, to climb, investors became cautious. They stopped giving credit, Asian currency markets flooded, the defaults worsened, and the region fell into darkness. Four years later, European banks were lending aggressively to technology companies. Central banks asked them to cut back. Money for tech companies dried up.
Thankfully, a global downturn does not always mean disaster here. Bad and doubtful debts in Australia climbed in 1996 and 2001, but were nowhere near the 2.7% of 1992. UBS, which provides that figure, also provides a ready example of the damage some banks are feeling. The Swiss giant has been treated badly by the US subprime crisis, and this week wrote off $15.2 billion.
In Britain, banking giant Egg cut off 160,000 credit card customers whose rating had deteriorated.
The German Government is rescuing IKB Deutsche Industrie Bank after IKB said it had lost €2 billion ($A3.24 billion) since the new year.
Australia is not yet there, but Mr Johnson sees the blocks building. He ticks the boxes over the past three global down-turns — all, he says, come down to credit.
"You need to have inflated asset values: housing and commercial property in Australia? Tick, tick.
"You need to have increased levels of gearing: tick, tick.
"Then, you suddenly need people not to get credit as easily as they could before. Tick."
(20min delay)