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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

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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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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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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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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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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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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

Bank Stocks

TD Bank Stock: A Safe Harbour in Uncertain Times?

| Aditya Raghunath

TD Bank stock has delivered outsized returns to shareholders in the last 20 decades. It is still trading at a…

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Bank Stocks

Better Buy: Canadian Bank Stocks or Fintech Stocks?

| Joey Frenette

TD Bank (TSX:TD) and the big bank stocks may prove better buys than the battered fintech firms at this juncture.

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Bank Stocks

Royal Bank of Canada: Is This 4.26% Yield a Buy?

| Andrew Button

Royal Bank of Canada (TSX:RY) stock has a 4.3% dividend yield, but is it a buy?

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Bank Stocks

Are Canadian Bank Stocks Oversold?

| Andrew Walker

Bank stocks are our of favour. Is it time for contrarian investors to buy?

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Bank Stocks

Canada Has High Household Debt: Are Bank Stocks Safe to Buy?

| Kay Ng

High household debt in Canada increases the investing risk in big Canadian bank stocks, which now offer higher dividend yields…

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Bank Stocks

What’s Next for Royal Bank Stock as the Economy Drifts?

| Andrew Button

Royal Bank of Canada (TSX:RY) has a lot of big things coming up in 2023.

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Bank Stocks

The 2 Cheapest Bank Stocks to Buy in June 2023

| Ambrose O'Callaghan

Canadian investors navigating a volatile market should snatch up undervalued bank stocks like Bank of Nova Scotia (TSX:BNS).

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Bank Stocks

Better Buy: Royal Bank Stock or BMO Shares?

| Andrew Walker

Royal Bank and Bank of Montreal continue to generate strong results and recently increased their dividends.

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Bank Stocks

If You’d Invested $2,500 in Royal Bank Stock in 2012, Here’s How Much You’d Have Today

| Amy Legate-Wolfe

Royal Bank (TSX:RY) stock has seen some heavy lifting of its stock price in the last decade, but should investors…

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Bank Stocks

Canada’s Banking Giants: Are These Stocks Worth Your Money Today?

| Ambrose O'Callaghan

Canadian investors should watch top bank stocks like Royal Bank of Canada (TSX:RY) closely after another interest rate hike.

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Bank Stocks

Is This the Perfect Time to Invest in Canadian Banking Stocks?

| Amy Legate-Wolfe

Canadian banking stocks have continued to perform pretty poorly over the last few months, but that could mean a great…

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Bank Stocks

The Yield on This Canadian Bank Stock Will Make You Smile

| Kay Ng

Anyone with sufficient risk tolerance and a long investment horizon can benefit from this Canadian bank stock's juicy dividend.

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Bank Stocks

There’s a Big Sale on the Big 6 Bank Stocks Right Now

| Kay Ng

Some Canadian bank stocks are on a bigger sale than others. Which will you buy for income and price appreciation?

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Don’t Avoid Bank Stocks! This 1 Actually Has Massive Long-Term Potential

| Demetris Afxentiou

Some investors have said that it's a good time to avoid bank stocks. Here's one bank you shouldn't avoid. Buy…

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Turn a $10,000 Investment Into $844 in Cash Every Year

| Kay Ng

The power of compound interest from regular investments in quality dividend stocks can deliver solid long-term returns and make you…

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1 Cheap TSX Bank Stock I’d Buy Over Suncor Right Now

| Aditya Raghunath

Here's one TSX bank stock that is well poised to outpace Suncor Energy in 2023 and beyond. Let's see why…

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1 Bank Stock I’d Buy Today (and 1 I’d Sell)

| Ambrose O'Callaghan

Bank earnings season is upon us, and I’d look to buy Bank of Nova Scotia (TSX:BNS) while avoiding another top…

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Bank Stocks

Royal Bank Stock Pays a 4.37% Dividend Yield, But Another Stock Looks Even Better Today

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY) may be the top dog on the TSX, but I prefer another dividend stock for…

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Big Yield at Low Prices: 2 Bank Stocks for June 2023

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM) stock and another intriguing bank stock are worth a look this June!

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Bank Stocks

1 Bank to Invest in and 1 to Sidestep in June 2023

| Christopher Liew, CFA

Here's a bank to invest in and one to avoid this month.

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Is goeasy Stock a Buy After its Q1 Earnings?

| Vineet Kulkarni

goeasy stock has returned a massive 1,220% in the last decade.

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Bank Stocks

Better Buy: TD Stock or RY Shares?

| Andrew Walker

TD Bank and Royal Bank are off their 2023 highs. Is one oversold and now a buy?

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3 Tips to Prepare for a Mild Recession This Summer

| Amy Legate-Wolfe

It's unclear whether we'll enter a recession, but that doesn't mean you shouldn't prepare. Consider these tips as part of…

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Why I’m Bullish on Canadian Bank Stocks Right Now

| Joey Frenette

Bank of Montreal (TSX:BMO) and another top Canadian bank stock look to be bargains at these levels.

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Bank Stocks

Interest Rates: Is Canada’s Mortgage Debt a Ticking Time Bomb?

| Andrew Button

If Canada's rising interest rates lead to a wave of defaults, banks like the Toronto-Dominion Bank could be in trouble.

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Bank Stocks

TSX Today: What to Watch for in Stocks on Monday, May 29

| Jitendra Parashar

New developments related to the U.S. debt-ceiling deal may keep TSX stocks largely positive today.

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TFSA: 2 Canadian Dividend Stocks for Your $6,500 Contribution Room

| Tony Dong, MSc, CETF®

These two top Canadian bank stocks could be great investments for a $6,500 TFSA contribution.

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Better Buy: BNS Stock or BMO Shares?

| Andrew Walker

Bank of Montreal and Bank of Nova Scotia just reported fiscal Q2 2023 earnings.

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Why This Canadian Bank Stock Is a Smart Value Investment

| Demetris Afxentiou

The big banks are almost always great options to buy, and here's one Canadian bank stock all investors need to…

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Is Royal Bank Stock Worth Buying Despite its Q2 Earnings Miss?

| Jitendra Parashar

Here are some key factors you may want to consider before buying RY stock after its recently released weak second-quarter…

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TSX Today: What to Watch for in Stocks on Friday, May 26

| Jitendra Parashar

The main TSX index remains on track to end the fifth consecutive week with losses.

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Bank Stocks

Is Scotiabank Stock a Safe Buy After Earnings?

| Amy Legate-Wolfe

Bank stocks continue to come out with earnings, with Scotiabank stock falling short. So which ones should investors consider?

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Bank Stocks

BMO Stock Drops After Earnings: Should You Buy the Dip?

| Kay Ng

Long-term investors can accumulate BMO stock here starting at a 5.2% dividend and knowing that it can experience further weakness…

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Bank Stocks

TSX Today: What to Watch for in Stocks on Thursday, May 25

| Jitendra Parashar

Besides more bank earnings, U.S. GDP data, and debt limit talks will remain on TSX investors’ radar today.

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Bank Stocks

2 Undervalued Stocks to Invest In This Month

| Aditya Raghunath

Financial lending TSX stocks such as Goeasy and EQB are top bets for value and income investors in May 2023.…

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Bank Stocks

Better Buy: TD Stock vs Canadian Western Bank

| Ambrose O'Callaghan

TD Bank and Canadian Western Bank are both promising bank stocks, but I’m favouring one before the summer.

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Bank Stocks

Why RBC Remains the King of Canadian Stocks

| Chris MacDonald

Here's why Royal Bank of Canada (TSX:RY) is one of the greatest Canadian companies to invest in for the long…

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Bank Stocks

3 Bank Stocks That Are Actually Great Buys Today

| Joey Frenette

Bank of Montreal (TSX:BMO) and two other bank stocks are worth consideration, as valuations fall further into the abyss.

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Bank Stocks

Ranked: The Top Canadian Bank Stocks for May 2023

| Ambrose O'Callaghan

I’m excited about bank stocks like Bank of Montreal (TSX:BMO) and its peers, as they get set to unveil second-quarter…

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Bank Stocks

This Regional Bank Stock Is Actually a Better Buy Than National Bank Stock

| Ambrose O'Callaghan

Laurentian Bank of Canada (TSX:LB) is a regional bank stock I’m looking to snatch up over its much larger provincial…

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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.