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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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| 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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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

Is BMO Stock a Buy at a Pullback Around $125?

| Aditya Raghunath

Bank of Montreal stock trades 18% below all-time highs, increasing its forward yield to almost 5% in May 2024.

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TD Bank Stock Falls 6% on Money-Laundering Investigation: Deal or Danger?

| Joey Frenette

TD Bank (TSX:TD) stock looks like a great bargain after its latest plunge over the ongoing U.S. probe.

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Forget AI: 3 Bank Stocks to Buy Instead

| Andrew Button

Bank stocks like EQB Inc (TSX:EQB) are much cheaper than AI stocks, despite in many cases having comparable growth.

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Big Bank Bull Run? 2 Canadian Bank Stocks Overdue for a Rally

| Joey Frenette

Buy TD Bank (TSX:TD) stock and another bank as they crash further into the abyss.

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This Under-the-Radar Canadian Stock Rose 244% in 4 Years

| Andrew Button

There are few financial stocks doing better than EQB Inc (TSX:EQB).

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Stocks for Beginners

TD Stock’s Dividend Yield Hits Over 5%: Is it Finally Time to Buy?

| Amy Legate-Wolfe

TD stock (TSX:TD) saw shares fall further after announcing a probe was underway in the US to identify money laundering…

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Better Buy: Royal Bank Stock or National Bank of Canada?

| Adam Othman

Banks are among Canada's most coveted blue-chip stocks, and there is a good reason for this. Not only are all…

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Bank Stocks

Should You Buy TD Stock on a Pullback?

| Andrew Walker

TD is down about 25% from the all-time high. Is TD stock now undervalued?

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3 Game-Changers at Canadian Western Bank: How They Impact CWB Stock

| Brian Paradza, CFA

Canadian Western Bank’s business profile is changing, and CWB stock investors could witness positive developments going forward.

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Better Buy: TD Bank or Scotiabank?

| Amy Legate-Wolfe

If you want dividends, bank stocks can be the best. But which is the better buy depends on your risk…

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1 Magnificent Dividend Stock That’s Down 21% and Trading at a Once-in-a-Decade Valuation

| Amy Legate-Wolfe

This dividend stock is near 52-week highs, but still down from all-time highs, with a highly valuable P/E ratio you…

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Better Buy: Royal Bank Stock or CIBC Stock?

| Amy Legate-Wolfe

Both of these banks have provided investors with long-term rewards, but which is the better buy to get out of…

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Bank Stocks

Better Bank Buy: Scotiabank Stock or CIBC?

| Kay Ng

One big Canadian bank has obviously outperformed the other, which makes it likely a better buy today as well.

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Bank Stocks

Scotiabank Stock Has a High Yield, But Is it a Buy?

| Andrew Button

The Bank of Nova Scotia (TSX:BNS) stock is very cheap and high yielding, but faces a lot of currency risk.

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Bank Stocks

JPMorgan vs. Royal Bank of Canada: Which Bank Stock Is Better Buy?

| Aditya Raghunath

Blue-chip bank stocks such as JPMorgan and Royal Bank of Canada are solid long-term bets for shareholders in 2024.

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Stocks for Beginners

1 Magnificent TSX Dividend Stock Down 22% to Buy and Hold Forever

| Amy Legate-Wolfe

This dividend stock may be down 22% from all-time highs, but is up 17% in the last year alone. And…

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Better Bank Buy: Scotiabank Stock or CIBC Stock?

| Amy Legate-Wolfe

These two bank stocks have been showing some improvements, but which is the better buy for investors who are looking…

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The Average Canadian Stock Investor Owns This 1 Stock: Do You?

| Chris MacDonald

Here's why Royal Bank of Canada (TSX:RY) makes it into most investor portfolios in Canada, and why global investors should…

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Bank Stocks

Is TD Stock a Buy, Sell, or Hold?

| Andrew Walker

TD stock just bounced. Are more gains on the way?

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Bank Stocks

TD Stock: Why I Reversed Course

| Andrew Button

Toronto-Dominion Bank (TSX:TD) is one stock I reversed course on in a big way.

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3 Ways Canadian Investors Can Save Thousands in 2024

| Amy Legate-Wolfe

If you've done the budgeting and are still coming out with less money than you'd like, consider these three ways…

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Best Stock to Buy Now: Is TD Bank a Buy?

| Kay Ng

TD Bank is a top candidate for conservative investors looking for reliable returns in the long run.

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TD Bank Stock Got Upgraded, and It’s a Good Time to Load Up

| Joey Frenette

TD Bank (TSX:TD) stock is getting too cheap, even for analysts at the competing banks!

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3 Top Reasons to Buy TD Bank Stock on the Dip Today

| Jitendra Parashar

After the recent dip, these three top reasons make TD Bank stock look even more attractive to buy today and…

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Bank Stocks

Where Will Royal Bank of Canada Stock Be in 5 Years?

| Jitendra Parashar

Here’s why Royal Bank stock has the potential to significantly outperform the broader market in the next five years.

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Is RBC a Buy, Sell, or Hold?

| Jitendra Parashar

Here’s why I think RBC stock is a great buy for long-term investors at current levels despite its dismal performance…

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1 Passive Income Stream and 1 Dividend Stock for $491.80 in 2024

| Amy Legate-Wolfe

Need to invest but have nothing to start with? This passive income stream and dividend stock are exactly where you…

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Is BNS a Buy, Sell, or Hold?

| Joey Frenette

Bank of Nova Scotia (TSX:BNS) stock looks like an intriguing high-yield bank stock to pursue this month.

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grow money, wealth build
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EQB Stock Has a Real Chance of Turning $500 Into $1,000 by 2030

| Aditya Raghunath

EQB is an undervalued dividend paying TSX bank stock that should more than double in market cap by the end…

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Should You Buy TD Stock for Its 5.2% Dividend Yield?

| Aditya Raghunath

TD Bank stock trades 27% from all-time highs, offering shareholders a tasty dividend yield of 5.2%. Is TD Bank stock…

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Best Stock to Buy Now: Is TD Bank Stock a Buy?

| Amy Legate-Wolfe

TD (TSX:TD) stock remains one of the biggest banks in Canada, and that's unlikely to change. But there are still…

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Dividend Stocks

Meta Is Now a Dividend Stock, but This TSX Stock Is a Better Buy

| Christopher Liew, CFA

Social media giant Meta is now a dividend payer but a TSX stock is a better buy for its 156-year…

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TD Bank: Should You Buy the Dip?

| Andrew Walker

TD is down about 8% in 2024. Is the stock now oversold?

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Bank Stocks

2 Top TSX Bank Stocks to Buy if There’s Another Stock Market SellOff

| Jitendra Parashar

Here are two of the most attractive Canadian bank stocks you can consider buying if there is another stock market…

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Why Goeasy Stock Rose 4.4% on Monday

| Karen Thomas, MSc, CFA

Operating results out of goeasy have continued strong, and this, combined with the stock's low valuation, is gaining investors' interest.

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Bank Stocks

Could Royal Bank Stock Help You Retire a Millionaire?

| Chris MacDonald

Let's dive into whether Royal Bank stock could be the best way for investors to retire millionaires, given its historical…

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Bank Stocks

Canadian Bank Stocks: Buy, Sell, or Hold?

| Amy Legate-Wolfe

Canadian bank stocks are recovering, but high interest rates will still impact them for the next year. However, this one…

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3 Reasons NOT to Claim CPP Benefits at Age 60

| Andrew Button

If you hold large amounts of Toronto-Dominion Bank (TSX:TD) stock, you may not need to take CPP at 60.

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Bank Stocks

Better Buy: CIBC or Bank of Nova Scotia Stock?

| Adam Othman

If you focus more on dividend yield than capital appreciation potential, one Canadian bank may better fit you than others.

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Dividend Stocks

Invest $500 Each Month to Create $1,851.60 in Passive Income in 2024

| Amy Legate-Wolfe

This dividend stock is one of the best options out there for those seeking long-term passive income, as well as…

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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.