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Fitch Ratings revise their outlook on the Commonwealth Bank of Australia to negative

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.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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