S&P/ASX 200 Index (ASX: XJO) bank shares have gotten a lot of attention in 2022 as interest rates began to rise.
Faced with soaring inflation, the Reserve Bank of Australia (RBA) hiked the official cash rate for the first time in more than a decade on 4 May, taking the rate from the historic low of 0.10% to the still quite low 0.35%.
The RBA has hiked rates at every monthly meeting since then, taking the cash rate to today's 2.85%. Several more hikes are expected over the coming months.
This casts particular light on ASX 200 banks, as they operate in one of the few sectors where rising interest rates can help their performance. That's because moderately higher rates enable banks to increase their net interest margins.
On the flip side, if rates rise too high it could negatively impact ASX 200 banks by increasing their levels of non-performing loans and decreasing the number of new home loans.
Which brings us to Wilsons latest portfolio reshuffle.
Why is Wilsons selling down its ASX 200 bank shares?
Wilsons is lightening its holdings of three ASX 200 banks. Namely Australia and New Zealand Banking Group Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).
The broker's analysts said (courtesy of The Australian), "After the banks' reporting season over the past few weeks, we have become increasingly cautious on the banks."
The analysts believe the banks have likely reached a peak in net interest margins. They also pointed to a slowdown in the Aussie economy and housing credit amid rapidly rising interest rates. All up they said this means the earnings estimates for the banks are "too optimistic".
Wilsons' Focus Portfolio exposure to the ASX 200 banks was reduced to 16.5% as it added a 3% exposure to Mineral Resources Limited (ASX: MIN).
How have the big banks performed in 2022?
Of the three ASX 200 banks Wilsons is trimming, only ANZ has underperformed in 2022, with the share price down 12%. NAB shares meanwhile have gained 4.7% while the Westpac share price is up 7.6% this calendar year.
For some context, the ASX 200 is down 6% year to date.
