Company Name: OVERSEA-CHINESE BANKING CORP
| Research House: CIMB | Price Call: HOLD | Target Price: 9.51 |
CIMB Research downgraded Oversea-Chinese Banking Corp to neutral from outperform and cut its target price to $9.51 from $10.35, citing lower insurance and trading contributions.
By 9:06 a.m., OCBC shares were 0.9% lower at $8.70. The shares have gained 11% since the start of the year, compared to the Straits Times Index’s 6% 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.
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