The Commonwealth Bank of Australia (ASX: CBA) has announced that Fitch Ratings has revised its outlook on the bank's long-term issuer default rating from 'stable' to 'negative'.
Fitch said that while it expects CBA to maintain its strong franchise and sound financial profile, there are some risks arising from the ongoing royal commission into the banks and the financial services sector.
While it will impact the entire industry, Fitch said that should the royal commission identify additional shortcomings, this could leave CBA more susceptible to a weaker operating environment than its peers Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB).
Foolish Takeaway
I think that while there are regulatory risks associated with investing in financial institutions now, CBA is still quite profitable and could be a good value play should the share price go lower.
