CIMB Research downgraded Oversea-Chinese Banking Corp Ltd to neutral from outperform and cut its target price to S$9.51 from S$10.35, citing lower insurance and trading contributions.

By 0106 GMT, OCBC shares were 0.9 percent lower at S$8.70. The shares have gained 11 percent since the start of the year, compared to the Straits Times Index's 6 percent rise.

OCBC's wealth management and insurance businesses may suffer amid volatile markets and sustained low interest rates, CIMB said in a report.

"With the lowest provision coverage, least aggressive general provisioning in the last three years plus a nascent rising non-performing loan trend, we think that OCBC's earnings has the most headwinds from credit costs," CIMB said in the report.

The brokerage also highlighted that OCBC has the highest price-to-book and price-to-earnings valuations in the sector, which may be unjustified as outlook dims.

0908 (0108 GMT)

(Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)