Fund managers and brokers are reducing their exposure to the big banks in favour of insurers as the tailwinds that propelled the sector through the rate-tightening cycle begin to fade.

While bank shares have been a mainstay in investor portfolios for decades, analysts say the benefits from rising rates are baked into bank share prices. They are wary that net interest margins (NIM) are past their peak as home loan competition intensifies and wholesale fund costs rise.