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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

Why Canada Hasn’t Had a Banking Crisis in 123 Years

| Andrew Button

Royal Bank of Canada (TSX:RY) has been around for 150 years and has never been at serious risk of collapsing.

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Better Buy: Royal Bank Stock or Bank of Nova Scotia?

| Andrew Walker

Bank stocks appear cheap after the latest plunge. Is Royal Bank or Bank of Nova Scotia a buy today?

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Bank Stocks

TD Bank Stock: A TSX Top Pick Amid U.S. Banking Rout?

| Joey Frenette

TD Bank (TSX:TD) stock could prove a worthy bet for brave investors who aren't fearful over the recent wave of…

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1 Oversold Dividend Stock (With a 4.7 Percent Yield) I’m Buying Right Now

| Amy Legate-Wolfe

American bank stocks have hit the market hard, including this stock that's down 22% in a year. Which is exactly…

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2 Canadian Bank Stocks That Won’t Let You Down

| Christopher Liew, CFA

Investors should have no fear holding Canadian bank stocks because the sector is stable, with strict federal policies and protection…

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Bank Stocks

2 Incredibly Cheap Bank Stocks for Passive Income Following SVB Fallout

| Joey Frenette

Canadian Western Bank (TSX:CWB) is one of many great bank stocks that passive-income investors should watch after SVB's fall.

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TSX Today: What to Watch for in Stocks on Friday, March 24

| Jitendra Parashar

Energy stocks on the TSX may witness a rebound at the open today due to recovering oil prices.

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How to Invest in the Bank Bailout News

| Andrew Button

Highly liquid banks like the Toronto-Dominion Bank are the most viable buys in an environment in which banks are collapsing.

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RRSP Investors: Save on Taxes and Buy These 2 Cheap Bank Stocks

| Aditya Raghunath

Are you looking to save taxes via RRSP contributions? Here are two TSX bank stocks you can hold in the…

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Better Dividend Buy: BMO or CIBC Stock?

| Amy Legate-Wolfe

While both offer high dividends and immense value, does BMO or CIBC stock offer the better dividend buy?

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Is Now the Right Time to Buy TD Bank Stock?

| Andrew Walker

TD stock trades near its 12-month low Is this bank stock now oversold?

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3 Bank Stocks I’d Buy on the Dip

| Andrew Button

Bank stocks like Bank of Montreal can add some much needed dividend income to your portfolio.

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2 Under-the-Radar Canadian Banks I’m Buying While the Buying Is This Good

| Ambrose O'Callaghan

I’m looking to snatch up undervalued and underrated bank stocks like Laurentian Bank (TSX:LB) in the final weeks of March.

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What’s Next for Royal Bank of Canada Stock?

| Puja Tayal

Royal Bank of Canada stock fell 7%, as bank stocks felt the tremors of the U.S. banking crisis.

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Canadian Investors: Should You Be Worried About Scotiabank Stock?

| Puja Tayal

The U.S. banking crisis created a selloff in global bank stocks. Should you be worried about Scotiabank stock or buy…

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Bank Stocks

TSX Bank Stocks: Should You Buy, Sell, or Hold Right Now?

| Aditya Raghunath

Canadian bank stocks, such as TD Bank and RY Bank, are reeling under the pressure of a weak macro environment.…

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RRSP Investors: 2 Undervalued Bank Stocks to Buy for Decades of Passive Income

| Aditya Raghunath

Here's why RRSP investors can consider buying beaten-down TSX bank stocks such as BMO and BNS in March 2023.

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Bank Stocks

Is TD Bank Stock a Good Buy Amid the Banking Turmoil?

| Andrew Button

The Toronto-Dominion Bank is relatively financially healthy at the moment.

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U.S. Bank Meltdown: These 2 Canadian Banks Are Safer

| Andrew Button

Canadian banks like Royal Bank of Canada (TSX:RY) are safer than the collapsing U.S. banks.

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2 Canadian Bank Stocks Unfairly Beat Up by SVB’s Collapse

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM) and Laurentian Bank (TSX:LB) stocks are great deals following the SVB-induced plunge.

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1 Deeply Undervalued Bank I’m Holding for the Next 10 Years

| Andrew Button

Toronto-Dominion Bank (TSX:TD) is deeply undervalued. I intend on holding it for the next 10 years.

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Credit Suisse Sold For Pennies: Are Your Bank Stocks Safe?

| Andrew Button

Credit Suisse is perceived to be risky. Are Canadian banks like Royal Bank of Canada safer?

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Should You Be Worried About TD Bank Stock?

| Puja Tayal

Canadian banks felt the tremors of the U.S. bank collapse, with TD Bank witnessing the biggest hit. Should you be…

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2 Canadian Bank Stocks to Watch After Last Week’s Selloff

| Joey Frenette

Scotiabank (TSX:BNS) and Royal Bank of Canada (TSX:RY) are two quality bank stocks that are getting too cheap amid banking…

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Passive Income: 3 Bank Stocks for TFSA Wealth

| Christopher Liew, CFA

Bank stocks are still the top options for Canadians seeking repeated passive income and building wealth through a TFSA.

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3 Stocks to Add to Your TFSA This Week

| Aditya Raghunath

TFSA investors can consider buying shares of companies such as Etsy and Shawcor right now to benefit from outsized gains…

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TSX Today: What to Watch for in Stocks on Monday, March 20

| Jitendra Parashar

The ongoing banking crisis and bearish movement in commodity prices could pressure TSX stocks today.

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1 Undervalued Stock That Smart Investors Are Buying in 2023

| Brian Paradza, CFA

Insiders recently loaded up on CIBC stock. You may want to buy the beaten-up Canadian bank stock, too.

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How to Protect Your Retirement Portfolio From a Banking Crisis

| Puja Tayal

The US banking crisis has created a market sell-off. Know how safe your money is and protect your retirement portfolio…

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Big Banks Drop: Why Now is the Time to Buy

| Amy Legate-Wolfe

Bank stocks have fallen off the face of the earth, but should you see this as a potential buying opportunity?…

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Royal Bank Stock Investors Have Made 126% in 10 Years

| Amy Legate-Wolfe

Don't see this drop in RBC stock (TSX:RY) as a bummer. It's an opportunity to pick up a long-term hold…

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3 TSX Stocks I’m Buying in Bulk During This Downturn

| Amy Legate-Wolfe

Canadian bank stocks dropped off the face of the earth, so now is the time I would consider buying these…

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Why Silicon Valley Bank’s Failure Won’t Hit Canadian Banks Hard

| Puja Tayal

The U.S. bank crisis created a selloff in bank stocks worldwide. Is the collapse of U.S. banks an opportunity or…

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TSX Today: What to Watch for in Stocks on Friday, March 17

| Jitendra Parashar

TSX investors may want to closely monitor updates on the ongoing banking turmoil.

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2 Top TSX Bank Stocks to Buy in March 2023

| Demetris Afxentiou

Looking to invest in some of the top TSX bank stocks? Here are two options to buy this month that…

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Buy This ‘Big 5’ Canadian Bank to Sidestep the U.S. Banking Mess [PREMIUM PICK]

| Iain Butler

We've been given a moment to take a deep breath, puff out our chests, and take pride to be Canadian.

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TSX Today: What to Watch for in Stocks on Thursday, March 16

| Jitendra Parashar

The ongoing banking crisis and commodity market selloff will continue to be on TSX investors’ radar today.

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Got $1,000? 3 Cheap Stocks to Buy Right Now

| Aditya Raghunath

Value investors looking for cheap TSX stocks trading at a discount can consider adding these three companies to their watchlist.

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Bank Stocks

TSX Today: What to Watch for in Stocks on Wednesday, March 15

| Jitendra Parashar

Continued corporate earnings and key U.S. economic releases could give further direction to TSX stocks today.

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Bank Stocks

Could Royal Bank Stock Be a Big Winner in 2023?

| Jitendra Parashar

Here’s why RY stock has the potential to be a winner in 2023, despite the recent banking sector turmoil.

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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.