May 5 (Reuters) - Australian shares fell on Monday, after a seven-session rally, dragged down by a sell-off in banking stocks, with the country's oldest lender Westpac leading the decline after missing first-half profit expectations.

The S&P/ASX 200 index .AXJO fell 0.2% to 8,218.80 points by 0041 GMT. The benchmark had gained 1.1% on Friday.

Heavyweight financials .AXFJ weighed the most on the benchmark, sliding as much as 1.5%. The sub-index is set for its weakest session since April 11.

Westpac WBC.AX fell more than 2% after the country's no. 2 mortgage lender's first-half profit missed market estimates as the loan spreads narrowed and the bank cautioned that evolving global trade policies were making it harder to secure financing.

The rest of the "Big Four" banks fell between 0.2% and 2.2%.

Domestic investors looked forward to the major banks' earnings reports this week to understand how U.S. President Donald Trump's tariffs have impacted the local financial sector.

The National Australia Bank NAB.AX and ANZ Group ANZ.AX will announce their half-year results on May 7 and May 8, respectively. The Commonwealth Bank of Australia CBA.AX, the country's largest lender, will report its third-quarter trading update on May 14.

Energy stocks .AXEJ added to the benchmark's decline, dropping 1.9%, dragged down by a slump in oil prices. O/R

Woodside Energy WDS.AX slipped 3%, while its smaller rival Santos STO.AX traded 2.1% lower.

Miners' .AXMM 0.5% decline further weighed on the blue-chip index, with the BHP Group BHP.AX trading 0.6% lower and Rio Tinto RIO.AX down 0.4%.

Meanwhile, Anthony Albanese secured a historic second term as Australia's prime minister on Saturday in a dramatic comeback powered by voters' concerns about Trump's influence.

New Zealand's benchmark S&P/NZX 50 index .NZ50 gained 0.3% to 12,365.41 points.

(Reporting by Adwitiya Srivastava in Bengaluru; Editing by Sumana Nandy)

((Adwitiya.Srivastava@thomsonreuters.com))

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