Mutual fund managers continued to be bullish on bank shares, with their allocation to the sector reaching an all time-high of over Rs 1.26 lakh crore at the end of March, mainly due to cheaper valuations.In comparison, fund managers' investments in bank shares stood at Rs 80,468 crore at the end of March 31, 2016."MFs have been adding exposure to financial sector, especially banking stocks due to several reasons -- lower valuations due to price corrections, expectation of corporate lending growth returning and better net interest margins, especially after the demonetisation announcement which lowered cost of funds for many banks," said Kaustubh Belapurkar, Director Manager Research at Morningstar Investment Adviser.During the past fiscal, many private sector banks, NBFCs and select PSU banks witnessed fresh purchases. Stocks like ICICI Bank and SBI witnessed significant additions, at the same time Axis Bank saw consistent selling, he said.