On February 24, Australian bank shares paused following an eight-day decline that saw more than A$63 billion ($40 billion) erased from their market capitalization.
The "Big Four" banks saw unprecedented growth last year driven by superannuation funds and retail investors, leading to multi-year highs and elevated multiples compared to the ASX200 benchmark index.
The recent week was the first decline since November 2020, marked by modest earnings growth, an increase in bad debts, and arrears prompting investors to sell off bank stocks.
Financials rebounded by 0.8% as of 0030 GMT on Monday but were still down over 7% since February 12, while the ASX200 index dropped by 3%.
Commonwealth Bank of Australia, the top lender, shed up to 10% of its value over the past eight sessions, equivalent to approximately A$25 billion, yet remained unchanged on Monday following a positive first-half profit report on February 12.
National Australia Bank, the leading business lender, halted a six-day losing streak on Monday but still suffered close to a 14% decline in the last eight sessions, translating to about A$18 billion lost in value due to borrowing strains on profits and increased delinquencies.
Both NAB and ANZ flagged margin pressures and impaired assets leading to an aggregate loss of A$19 billion in value.
Monday saw NAB and ANZ gaining over 1% while Westpac climbed by 0.6%.
Macquarie highlighted that with potential bank earnings upgrades dwindling and high valuations, a sector de-rating may be imminent, exposing a risk to share prices.
($1 = 1.5694 Australian dollars)