Commonwealth Bank followed up the 25 basis point rise in the cash rate yesterday with a 45 basis point rise in its standard variable home loan rate, taking this rate to 7.81 per cent. Interest rates on CBA's deposit accounts that attract interest will rise by 25 basis points. With a market-leading share of 28.4 per cent, and a $296 billion home loan book, CBA can expect to earn an extra $500 million a year in profit from this pricing decision, assuming 80 per cent of its portfolio benefits. The actual share may be higher depending on any pricing gambits through Bankwest and the extent of fixed rate and discounted pricing products sold by the bank. The rate rise has angered, and will continue to anger, customers as well as consumer lobbies, the government and maybe even regulators. The CBA pricing decision is having swift repercussions, with the forthcoming banking reform package foreshadowed by the Treasurer, Wayne Swan, prominent among them. Other banks might follow. Westpac was feeling the pressure, and the temptation, over the three months that CBA tantalised the market with the prospect of lifting the yield on its home loan book. ANZ and Bendigo have said they want to lift margins on home loans. NAB seems less likely to move rates by more than 25 basis points, given the tenor of its efforts to act as a customer champion in retail banking lately. There is some expectation in the market that NAB will fall into line with CBA rates, although, given the flat NAB share price yesterday, bank investors may be expecting NAB to follow the Reserve Bank of Australia's lead instead. Ross McEwan, group executive for retail banking services at CBA, told ABC Radio's PM program that "we are probably seeing an increase now of about two to three basis points per month, because of the funding costs we're having to bear both onshore and offshore to get the money to fund our book ... The relationship between the overnight cash rate over the last three years has just about ... not quite ... become irrelevant. "We have been wearing more of the cost of funding than we have been passing on to customers ... The Commonwealth Bank is one of the largest businesses in Australia ... We need to ensure we make sure that we maintain that position of strength in this marketplace that has held us incredibly well in the past three years." McEwan said that "whilst we do listen to the parliamentarians, we have a business to run, and the increased funding costs that we're continuing to experience unfortunately at times have to be passed through." He said: "As the prices go up, if you take that theme along the lines, the smaller banks will be able to