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(Reuters) - Shares of top Australian banks took a breather on Monday, after a sharp sell-off over the past eight sessions wiped off more than A$63 billion ($40 billion) from their market value.
Shares of the "Big Four" banks logged unprecedented growth last year on strong flows from superannuation funds and retail investors, pushing them to multi-year highs and trading at high multiples to the ASX200 benchmark index.
But last week's interest rate cut - the first since November 2020 - alongside modest growth earnings, a rise in bad debts and arrears for the major banks triggered a sell-off as investors exited richly valued stocks.
Financials rose 0.8%, as of 0030 GMT, on Monday but were still down more than 7% since February 12, compared with a 3% drop in the ASX200 index.
Top lender Commonwealth Bank of Australia lost as much as 10% in the past eight sessions, losing about A$25 billion in market value. It was flat on the day.
It reported an upbeat first-half profit and margin on February 12.
National Australia Bank, the country's top business lender, snapped a six-day losing streak on Monday but has lost nearly 14% in the last eight sessions, or about A$18 billion in value.
Last week, NAB flagged borrowing strain on its first-quarter profits and warned of more borrowers falling behind on payments.
Westpac and ANZ Group also flagged margin contraction and rise in impaired assets last week. Both banks have lost an aggregate A$19 billion in value.
On Monday, NAB and ANZ were up over 1%, while Westpac rose 0.6%.
"With bank earnings upgrades potentially reaching their end, even ahead of the impact of lower rates... the long-awaited de-rating of the sector may be here," Macquarie said.
"We see further risk to share prices as valuations remain high."
($1 = 1.5694 Australian dollars)
(Reporting by Sameer Manekar in Bengaluru; Editing by Rashmi Aich)