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Bank Stocks

What are bank stocks?

Bank stocks represent partial ownership in a financial institution that’s licensed to hold and loan money. Over time, bank stocks have been relatively safe investments, as they offer products and services that most people need.

How do you choose a good bank stock? 

1. Look at the bank’s profitability

First, you want to be sure the bank is even profitable. To do that, you can use the following metrics. 

  • Return on equity (ROE): this metric tells you how much profit a bank makes from its shareholder’s equity. The higher this metric, the more efficient a bank is using its stakeholder’s money. 
  • Return on assets (ROA): the ROA tells you the overall profit a bank makes in relation to its assets. The higher the ROA, the more profit a bank makes from its assets. 
  • Efficiency ratio: the efficiency ratio tells you how much revenue a bank uses towards its operating costs. The lower the efficiency ratio, the more revenue a bank theoretically has. 

2. Assess the bank’s risks 

One of the biggest risks a bank has is losing money on an outstanding loan. As with profitability, a couple metrics could help you see how much banks are losing.

  • Nonperforming loans ratio (NPL): Nonperforming loans are loans that are at least 90 days past their due date. A bank with a low percentage of NPL (2% is a good ratio) is doing fairly well collecting loan repayments from its customers. 
  • Net charge-offs: a net charge-off is a bank’s declaration stating that a loan hasn’t been paid and is unlikely to be paid. As with NPLs, the less net charge-offs a bank has, the less money it’s losing on outstanding loans. 

3.  Check back here for our top picks 

Finally, we’ll keep this page updated with our staff writer’s reviews and assessment of Canada’s bank stocks. Our writers often use these metrics to help investors see which bank stocks are doing well and which are doing poorly. 

Check back here for the most up to date information about bank stocks in Canada.

Top Articles

Bank Stocks

Is BNS Stock a Buy in January 2023?

| Andrew Walker

Bank of Nova Scotia stocks looks cheap right now. Is this a good time to buy or should investors wait?

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Bank Stocks

TSFA or RRSP – Better Place to Stash Cash in 2023?

| Amy Legate-Wolfe

If a recession hits us hard in 2023, you'll want the ability to take out cash if you need it.…

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TFSA Investors: Why You Should Invest Your Room ASAP With These 3 Stocks

| Adam Othman

Choosing the right TFSA stocks for your portfolio might take some time. But with the right choices, you can stick…

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Bank Stocks

Is Now the Right Time to Buy Canadian Bank Stocks?

| Andrew Button

Some bank stocks, like Toronto-Dominion Bank (TSX:TD) are doing well; others, not so much. Is it time to buy bank…

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Bank Stocks

2 Bank Stocks to Load Up on in a Recession

| Chris MacDonald

Here are two top Canadian bank stocks investors may want to consider, particularly as we potentially head into a recession.

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Bank Stocks

Better Buy: RBC Stock or the Entire TSX?

| Brian Paradza, CFA

Buying Royal Bank of Canada (TSX:RY) stock lets you invest like Warren Buffett does, but investing in the entire TSX…

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Bank Stocks

CRA: 3 Big Changes Coming to 2023 Tax Breaks

| Aditya Raghunath

Use the tax breaks to lower your tax bill and purchase blue-chip TSX stocks such as Royal Bank of Canada.

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Bank Stocks

The 1 TSX Stock I’d Go All-In On

| Andrew Button

TD Bank (TSX:TD)(NYSE:TD) stock is out of favour now but could come back in a big way.

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Recent Bank Stocks News

Bank Stocks

TFSA Investors: These 3 Bank Stocks Are Too Cheap to Ignore!

| Andrew Button

Small banks like Laurentian Bank (TSX:LB) are getting extremely cheap.

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Dividend Stocks

Canada’s Warren Buffet Is Betting on These Stocks

| Mat Litalien, MBA

Prem Wasta, the Canadian Warren Bufffet, has made big bets on Blackberry Ltd (TSX:BB)(NYSE:BB) and the Bank of Nova Scotia…

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Bank Stocks

3 Tricky TFSA and RRSP Pitfalls to Avoid

| Christopher Liew, CFA

Your TFSA and RRSP come with pitfalls. Avoid three of these common ones and invest in great companies like TD…

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Bank Stocks

TFSA Investors: 2 Banks Stocks Yielding up to 4.7%

| Ambrose O'Callaghan

Investors looking for a boost to their TFSA this fall should look to stocks like National Bank of Canada (TSX:NA)…

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Dividend Stocks

This Under-the-Radar Bank Stock is an Intriguing Buy Today

| Christopher Liew, CFA

National Bank of Canada (TSX:NA) is entering the next chapter of its growth story. In couple of years, the bank…

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Bank Stocks

Young RRSP Investors: 2 Stocks to Help You Retire Wealthy

| Andrew Walker

Young Canadian investors are facing retirement challenges, but there are ways to build your own pension wealth.

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Dividend Stocks

TFSA Investors: Why $1,000,000 May Not Be Enough for Your Retirement

| David Jagielski

Investing in Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) can be a great way to generate recurring income during your retirement years.

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Dividend Stocks

2 Dividend Aristocrats I’d Buy for 2020

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) and another corrected dividend aristocrat I'd buy more of for 2020.

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Dividend Stocks

3 TFSA Mistakes That Could Cost You a Fortune

| Joey Frenette

Why investors would be best served avoiding these TFSA mistakes by systematically investing in blue chips like Bank of Montreal…

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Bank Stocks

RRSP Dividend Investors: 2 Top Stocks to Buy Today and Hold for Decades

| Andrew Walker

Canadian National Railway Company (TSX:CNR)(NYSE:CNI) and a top financial institution deserve to be on your RRSP radar today. Here's why.

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Dividend Stocks

RRSP Investors: 3 Top Dividend-Growth Stocks for 2020

| Brian Pacampara, CFA

This group of dividend-growth streakers, including Royal Bank of Canada (TSX:RY)(NYSE:RY), can help build your wealth the prudent way.

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Dividend Stocks

Thank the Dividend Gods for These 3 Stocks

| Christopher Liew, CFA

There’s every reason to thank the dividend gods for Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), Pembina Pipeline Corp (TSX:PPL)(NYSE:PBA), and…

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Dividend Stocks

Buying a Stock: Here’s How to Value it

| Daniel Da Costa

There are a number of ways to check the value of a stock before you start your due diligence that…

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Dividend Stocks

Baby Boomers’ Advice: Plan for Retirement in Your Early 20s

| Christopher Liew, CFA

Baby boomers are advising the younger generation not to delay retirement planning. Start the process by investing in Bank of…

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Dividend Stocks

Canadians Can Profit From TSX Oligopoly Stocks in a Market Crash

| Debra Ray

If you smoke marijuana and prefer Seth Rogen’s new brand, Houseplant, maybe you would do well to invest in Canopy…

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Dividend Stocks

TD Bank’s (TSX:TD) Returns Will Make Your Jaw Drop

| Andrew Button

The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock is up 127% over ten years. Will it continue?

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Bank Stocks

Why a Recession in 2020 is NOT Likely!

| Chen Liu

A recession in 2020 is not likely, based on the pattern of the share price for Royal Bank of Canada…

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Dividend Stocks

Ignore the Short-Sellers: Buy Canadian Imperial Bank of Commerce (TSX:CM) Today

| Matt Smith

Buy Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) today and lock in a 5% yield.

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Dividend Stocks

2 Great Canadian Buy-and-Hold Stocks for Lazy Investors

| Victoria Hetherington

Investors looking for low-maintenance passive income should add Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and one other stock to a dividend…

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Dividend Stocks

When the Next Recession Hits, You Want to Be Invested in TD Bank (TSX:TD)

| Mat Litalien, MBA

TD Bank's (TSX:TD)(NYSE:TD) diversification south of the border and expected earnings growth are two reasons why it is better positioned…

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Dividend Stocks

Bank of Nova Scotia (TSX:BNS) Is the Most Vulnerable Canadian Bank to a Global Recession

| Matt Smith

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) appears particularly exposed to a global economic slump.

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Bank Stocks

2 Top Bank Stocks to Buy Immediately

| Adam Othman

Bank of Montreal (TSX:BMO)(NYSE:BMO) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are two banking stocks you should buy as soon…

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Energy Stocks

RRSP Investors: Should You Buy Bank of Nova Scotia (TSX:BNS) or Suncor (TSX:SU) Stock Today?

| Andrew Walker

Is Suncor Energy Inc. (TSX:SU)(NYSE:SU) or Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) a better stock for your RRSP right now?

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Dividend Stocks

1 Critical Mistake Every Investor Should Avoid During a Recession

| Matt Smith

Buy Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) today to hedge against a recession and lock-in a 4% yield.

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Dividend Stocks

The #1 Mistake to Avoid During a Market Crash

| Christopher Liew, CFA

The best way to counter a market crash and not commit the mistake of selling low is to invest in…

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Bank Stocks

Warren Buffett Is Bracing for a Market Crash: Should You?

| Andrew Button

Warren Buffett is hording cash and buying bank stocks like Bank of America (NYSE:BAC). Should you?

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1 Proven Stock You Can Buy and Hold Forever

| Adam Othman

Bank of Montreal (TSX:BMO)(NYSE:BMO) stocks are assets you can buy-and-hold for a century, benefitting from reliable dividend payouts throughout without…

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Dividend Stocks

A Top Dividend Stock to Buy When the Next Market Crash Comes

| Haris Anwar

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one of the top dividend stocks to buy when its price becomes more attractive.

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Dividend Stocks

TFSA Demystified: 3 Huge Mistakes to Avoid

| Christopher Liew, CFA

You can grow your balance faster by efficiently managing your TFSA and holding Royal Bank of Canada (TSX:RY)(NYSE:RY) and Superior…

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Bank Stocks

TFSA Retirement: A Top Dividend Stock to Generate $425 Per Month in Tax-Free Income

| Andrew Walker

Here's how a retired couple can get more than $5,000 per year in tax-free income from their savings.

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Dividend Stocks

Even a Recession Won’t Stop This Bank From Delivering Value

| Matt Smith

Buy National Bank of Canada (TSX:NA) today and lock in a 4% dividend yield.

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Dividend Stocks

TFSA Investor Alert: Turn $10,000 Into $97,000 by Investing in This Banking Stock Now

| Rahim Bhayani

Buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock now, as it sets up the foundation for a monster 2020.

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Bank Stocks

Why This High-Dividend-Yield Asset Manager Stock Is a Screaming Buy

| Aditya Raghunath

Fiera Capital Corp. (TSX:FSZ) is a growth stock with a high dividend yield. Here's why it should be a part…

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Dividend Stocks

Worried About Not Having Enough Money During Retirement? Why Investing in TD Bank (TSX:TD) Can Help!

| David Jagielski

Whether you're young or old, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) can be a great investment to make at any stage in your life.

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Bank Stocks

TFSA Investors: 1 Bank Stock That Boasts a 5.3% Yield

| Ambrose O'Callaghan

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) boasts a beefy dividend and nice value in October.

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Bank Stocks

Buy This Smoking-Hot Innovative Banking Stock

| Rahim Bhayani

Buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock for its innovative approach to attracting and engaging customers.

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Bank Stocks

Avoid This 1 Financial Services Stock!

| Chen Liu

goeasy’s (TSX:GSY) share price is on the rise but you should not add this stock to your RRSP or TFSA…

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Dividend Stocks

Why You Shouldn’t Invest All of Your Money in Stocks

| David Jagielski

Royal Bank of Canada (TSX:RY)(NYSE:RY) is a great long-term investment, but that doesn't mean it hasn't run into some tough years…

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Dividend Stocks

2 Large-Cap Stocks With a Dividend Yield of Over 5%

| Aditya Raghunath

Why investors can look to add Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) to their defensive portfolio.

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Bank Stocks

Worried About Retirement? Adopt These 3 Proven Habits Today!

| Ryan Vanzo

Want to retire in complete comfort? Stocks like Fairfax Financial Holdings Ltd (TSX:FFH) can help, but only if you master…

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Frequently Asked Questions

Why invest in bank stocks?

Quality bank stocks have a strong history of generating profits and managing crises, making them a great investment.

In addition to their strong performance, many of Canada’s top banks pay dividends, with payouts that increase over time. For Canadian investors looking to pocket a little extra from their stocks, dividends can help you buy more shares or more cash.

Finally, bank stocks can help diversify your investing portfolio. If you already have stocks in other sectors (mining, technology, energy), bank stocks could add much needed stability, as well as expose you to the gains in another sector.