It would have been irresponsible for CBA CEO Ralph Norris to simply tell borrowers to ditch non-bank lenders, to declare borrowers will be hit with significantly higher rates from that quarter, that they’re not as “safe”. That might have sparked something of run on the non-bank businesses. So he did it with a careful nudge and a wink instead.

Media questioning at this morning’s profits announcement concentrated on the international liquidity crunch in general and home loans in particular thanks to RAMS’ warning yesterday.

Some non-bank lenders were already increasing their margins, said Norris. While there’s a general widening of margins, “the issue for non-bank lenders will be accentuated” as they don’t have the deposit bases enjoyed by the banks.

And that particularly applies to the CBA which enjoys Australia’s biggest depositor base. “The effect on us is much more limited.”

How fortuitous, especially when the bank is forecasting growth in lending demand for housing anyway thanks to high migration levels.

But despite the CBA’s 18 per cent surge in cash net profit to $4.6 billion and its 80-point jump in return on equity to 22.1 per cent, it looks like the CBA is planning to pass on to borrowers any margin pressure it does encounter.

The bottom line is the competitive pressure exercised by the non-bank lenders in the housing market has just been removed and the banks will make the most of it. No wonder Ralph was able to promise that the CBA will continue to increase its profit by as much or more than its peers.

Yet the market this morning isn’t quite buying that this is really an opportunity for our major banks – fear is still a little more powerful than greed. Bank shares are all down but by less, on average, than the overall market.

The cartel has just become a little stronger in an economy that continues to have excellent prospects if with rising interest rates.

Norris pointed to his native New Zealand as an example of what happens even when rates rise by what the CBA considers a “shock level” of 200 points – there are still very few mortgage defaults when there’s full employment.