(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 ( CBAUF ) 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 ( NAUBF ), 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 ( ANZGF ) 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)