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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

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| 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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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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Is Now the Right Time to Buy Canadian Bank Stocks?

| Andrew Button

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2 Bank Stocks to Load Up on in a Recession

| Chris MacDonald

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Bank Stocks

Better Buy: RBC Stock or the Entire TSX?

| Brian Paradza, CFA

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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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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

Dividend Stocks

Why Royal Bank of Canada’s (TSX:RY) Stock Price Fell 4% in August

| Jason Phillips

Royal Bank of Canada (TSX:RY)(NYSE:RY) reported encouraging second-quarter results in August, but is continued strength from its wealth management division…

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Bank Stocks

RRSP Investors: Is Royal Bank of Canada (TSX:RY) Stock a Buy?

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) is catching a bit of a tailwind after a four-month slump. Is it time to…

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Dividend Stocks

Battle of the Financials: Manulife Financial (TSX:MFC) (USA) vs. the Big 6 Banks: Which Should You Buy?

| Joey Frenette

Should you buy a bank like CIBC (TSX:CM)(NYSE:CM) or an insurer for cheap investment income?

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These 2 Great Canadian Stocks Are Hot Right Now

| Victoria Hetherington

Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) and one other stock on the TSX have been getting especially positive press lately.

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5 Stocks to Start Your TFSA Retirement Portfolio

| Andrew Walker

Here's why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and another four top Canadian stocks deserve to be on your TFSA radar…

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Dividend Investors: Should You Buy Canadian Imperial Bank of Commerce (TSX:CM)?

| Prosper Bakiny

Despite recent headwinds, is Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) a good dividend stock?

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Dividend Stocks

Why Bank of Nova Scotia (TSX:BNS) Stock Rose 2% in August

| Matt Smith

Bank of Nova Scotia's (TSX:BNS)(NYSE:BNS) performance is improving, making it the best of the big banks to own.

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Energy Stocks

3 Quality Stocks That Are Stupid Cheap Right Now

| Amy Legate-Wolfe

Looking for a bargain? It doesn't get better than Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and these two energy giants.

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Income Investors: 3 Oversold Stocks With Rising Dividends

| Andrew Walker

Bank of Montreal (TSX:BMO) (NYSE:BMO) and another two top Canadian dividend stock appear oversold right now.

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Dividend Stocks

Is it Time to Load Up on the Big Banks?

| Matt Smith

Now is the time to add Royal Bank of Canada (TSX:RY)(NYSE:RY) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) to your portfolio.

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| Adam Othman

All retirees should maintain a safe nest egg to help them survive the best years of their lives. In times…

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2 Attractive Stocks Trading Close to 52-Week Lows

| Aditya Raghunath

What makes BlackBerry Ltd. (TSX:BB)(NYSE:BB) and Bank of Montreal (TSX:BMO)(NYSE:BMO) attractive at the current prices?

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Dividend Stocks

Should You Hold Dividend Stocks During a Recession?

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock may not only be good to hold during a recession, but it could be a great time…

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Dividend Stocks

Millennials: Yes, You Could Realistically Retire a TFSA Multi-Millionaire

| Nelson Smith

Getting to multi-millionaire TFSA status is a lot easier when you invest in proven winners like Royal Bank of Canada…

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Half of Canadian Millennials Are Making This TFSA Mistake

| Amy Legate-Wolfe

Four out of five millennials are saving, but half are making this tragic mistake.

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Want to Retire Wealthy? 1 Stock Is All You Need

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Bank Stocks

Investors: Why You Need to Add This Financial Growth Stock to Your Portfolio

| Aditya Raghunath

Why investors can expect goeasy Ltd (TSX:GSY) to beat the broader market over the long-term.

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3 Stocks for High-Yield Investors

| Andrew Walker

Inter Pipeline Ltd. (TSX:IPL) and two other Canadian dividend stars should be attractive income picks today.

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TFSA Investors: 2 Stocks That Recently Raised Their Payouts

| David Jagielski

Keyera Corp (TSX:KEY) and this other stock are great options for dividend investors looking to buy and hold over the long…

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TFSA Investors: These 3 Stocks Just Hit Massive Buy Points

| Nelson Smith

Suncor Energy Inc. (TSX:SU)(NYSE:SU), Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), and Great Canadian Gaming Corporation (TSX:GC) shares look attractively valued today.

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Dividend Stocks

Which Is the Best Bank Stock to Buy Heading Into 2020?

| Kay Ng

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Investing is a risk, and there are investing rules to live by to keep you away from trouble. Bank of…

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| Andrew Walker

Here's how holding top dividend stocks inside your TFSA can help you boost retirement income without compromising OAS payments.

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Why Now Could Be a Great Time to Load Up on Bank Stocks

| David Jagielski

Royal Bank of Canada (TSX:RY)(NYSE:RY) could be a great dividend stock to buy on the dip, especially if home sales…

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Is Now the Time to Buy TD Bank (TSX:TD) Stock?

| Mat Litalien, MBA

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) reported mixed quarterly results. Value investors rejoice, as its stock is once again on sale.

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How Canadian Families Can Save $1 Million

| Andrew Walker

Here's how investing in top dividend stocks such as Royal Bank of Canada (TSX:RY) (NYSE:RY) and Fortis Inc. (TSX:FTS) (NYSE:FTS)…

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Should You Buy Canopy Growth (TSX:WEED) or CIBC (TSX:CM) Stock Today?

| Andrew Walker

Canopy Growth Corp (TSX:WEED)(NYSE:CGC) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are out of favour right now. Is one stock…

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Revealed: Collect 6.7% Dividends the Safe Way

| Christopher Liew, CFA

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), Enbridge Inc. (TSX:ENB)(NYSE:ENB), and BCE Inc. (TSX:BCE)(NYSE:BCE) are among the top-tier stocks that pay…

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Couples in Your 30s: Build a $1,000,000 TFSA by 50

| Adam Othman

By your 30s, you have completed your education and should be hitting your strides in your respective careers. Invest in…

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Is Toronto Dominion Bank (TSX:TD) Stock Now Oversold?

| Andrew Walker

Toronto Dominion Bank (TSX:TD) (NYSE:TD) is down 10% in the past year. Is this the right time to buy the…

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Dividend Stocks

3 Cheap Dividend Stocks to Stick in Your RRSP Today

| Andrew Walker

Here's why Enbridge Inc. (TSX:ENB)(NYSE:ENB) and another two high-yield stocks deserve to be on your RRSP radar.

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Dividend Stocks

Toronto-Dominion Bank (TSX:TD) Is an Even Better Buy After a Strong Q3

| David Jagielski

Last week, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has been struggling of late and, unfortunately, the bank's most recent results did little to inspire investors.

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Bank Stocks

What These 2 Big Six Banks’ Earnings Told Us

| Amy Legate-Wolfe

After Royal Bank of Canada (TSX:RY)(NYSE:RY) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) reported earnings, here's what investors can expect.

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Dividend Stocks

3 Dividend Stocks for New Investors to Build Their Portfolios Around

| Kay Ng

Jumpstart your dividend portfolio with the +6% average yield of Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), Enbridge Inc. (TSX:ENB)(NYSE:ENB), and Brookfield…

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Bank Stocks

This Stock Market Genius Has 3 New Stock Picks

| Ryan Vanzo

Famed investor Steve Eisman is shorting Canadian banks like Royal Bank of Canada (TSX:RY)(NYSE:RY) and Laurentian Bank of Canada (TSX:LB).…

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Energy Stocks

These Quality Canadian Stocks Are Trading at 52-Week Lows

| Amy Legate-Wolfe

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and these two other stocks offer a quality bargain.

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Dividend Stocks

Bank of Nova Scotia (TSX:BNS): The Best Big Bank to Own

| Matt Smith

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) hiked is dividend yet again, making now the time to buy.

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Dividend Stocks

3 Foundation Stocks to Fortify Your Portfolio

| Adam Othman

Having a strong foundation for your investment portfolio is crucial. The likes of Royal Bank of Canada (TSX:RY)(NYSE:RY), Suncor Energy…

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Dividend Stocks

3 High-Yield Stocks for Retirees

| Andrew Walker

Here's why Pembina Pipeline Corp. (TSX:PPL)(NYSE:PBA), a bank, and a communications company deserve to be on your income radar today.

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Dividend Stocks

3 Bank Stocks That Recently Raised Their Payouts

| David Jagielski

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and these two other dividend stocks continue to show why they're solid long-term investments that…

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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.