Member Login
  1. Category
    2. /
  2. Investing
    3. /
  3. Bank Stocks
    4. /

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

stock data
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?

Read more »

Elderly man giving a Christmas present to his wife
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.…

Read more »

Gold bullion on a chart
Dividend Stocks

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…

Read more »

Bank sign on traditional europe building facade
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…

Read more »

Bank sign on traditional europe building facade
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.

Read more »

A stock price graph showing growth over time
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…

Read more »

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.

Read more »

A golden egg in a nest
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.

Read more »

Recent Bank Stocks News

growing plant shoots on stacked coins
Bank Stocks

Banking on Long-Term Growth and Income

| Demetris Afxentiou

Looking for that perfect investment for your portfolio? Here’s one stock for those banking on long-term growth and income generation.

Read more »

Bank Stocks

TD Stock: A Buy Following Earnings?

| Chris MacDonald

Here's why many investors may want to consider Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and TD stock in this current environment.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

The 2 Best Big Six Bank Stocks to Buy After Earnings

| Ambrose O'Callaghan

Canadians should look to snatch up top bank stocks like National Bank of Canada (TSX:NA) after the first quarter earnings…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Bank Stocks

Royal Bank of Canada (TSX:RY): A Top Stock to Buy Right Now?

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) is the bluest of blue-chip stocks on the Canadian stock market, but should you load…

Read more »

analyze data
Tech Stocks

4 Top Canadian Stocks to Buy as Markets Trend Upwards

| Rajiv Nanjapla

These four Canadian stocks could outperform the broader equity markets this year.

Read more »

think thought consider
Bank Stocks

Why Right Now Is the Time to Buy Big Six Banks for Major Income

| Amy Legate-Wolfe

The Big Six banks are solid options for investors during times of uncertainty, and these two provide the opportunity for…

Read more »

Bank Stocks

2 Financial Sector ETFs to Buy and Hold as Interest Rates Rise

| Tony Dong

The financials sector tends to do well in a rising rate environment.

Read more »

money cash dividends
Energy Stocks

Got $1,000? 3 Top Canadian Value Stocks to Buy Right Now

| Rajiv Nanjapla

Given their attractive valuations and growth potential, I expect these three value stocks to deliver superior returns over the next…

Read more »

Community homes
Bank Stocks

Aggressive Rate Hike Is Next as Home Prices Soar 22%

| Christopher Liew, CFA

The Bank of Canada might be more aggressive in the second round of its rate-hike cycle due to soaring home…

Read more »

analyze data
Bank Stocks

Canadian Retirees: Don’t Rely Only on Your CPP Pension

| Christopher Liew, CFA

Canadians must have other income sources, not only their CPP pension alone, to avoid financial dislocation in retirement.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

BUY ALERT: 3 Bank Stocks to Snag on the Dip Today

| Ambrose O'Callaghan

Canadians should look to snatch up bank stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and others in this correction.

Read more »

analyze data
Bank Stocks

1 Undervalued Stock to Buy as the Ukraine-Russia Crisis Worsens

| Joey Frenette

Scotiabank (TSX:BNS)(NYSE:BNS) has been hitting the pause button on its rally, but after many years of resilience, here's why the…

Read more »

stock data
Bank Stocks

Impressive Expansion: Another Reason to Buy TD Stock

| Chris MacDonald

Here's another reason why investors may want to consider Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and TD stock right now.

Read more »

edit Sale sign, value, discount
Bank Stocks

2 Undervalued Bank Stocks to Beat the Inflation Rate in Canada

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are among the best banks for your buck right here!

Read more »

grow dividends
Bank Stocks

TD: Soon the 6th Biggest Bank in the U.S.!

| Andrew Button

The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is set to become the sixth largest bank in America!

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Bank Stocks to Buy if the Market Pulls Back

| Karen Thomas, MSc, CFA

Bank stocks like TD Bank and Royal Bank stock are prime stocks to buy to take advantage of any upcoming…

Read more »

edit Four girl friends withdrawing money from credit card at ATM
Bank Stocks

This Canadian Bank Stock Could Be a Great Buy Following Earnings

| Chris MacDonald

Here's why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a top Canadian bank stock to consider right now.

Read more »

Profit dial turned up to maximum
Bank Stocks

2 Stocks That Could Benefit From an Interest Rate Hike

| Jed Lloren

Worried about the interest rate hikes that are projected to come this year? Here are two stocks that could benefit!

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Bank Stocks

Could Royal Bank Stock Be a Great Buy Right Now?

| Chris MacDonald

Here's why Royal Bank (TSX:RY)(NYSE:RY) is a top bank stock long-term investors may want to consider as volatility picks up…

Read more »

calculate and analyze stock
Bank Stocks

Down Over 35%: Should You Buy goeasy (TSX:GSY)?

| Rajiv Nanjapla

The recent correction in goeasy has provided an excellent entry point for long-term investors.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

2 Top Canadian Bank Stocks to Buy for March 2022

| Adam Othman

Whether you want to continue riding the growth wave the banks are on or you are hoping for a normalization,…

Read more »

exchange traded funds
Bank Stocks

Retirees: 2 Ultra-Low-Cost ETFs Offering Passive Income

| Andrew Button

If you're looking for a low-cost, high-income fund, consider the BMO Equal Weight Banks ETF (TSX:ZEB).

Read more »

hand using ATM
Bank Stocks

Toronto-Dominion Bank Stock Looks Severely Undervalued After Unwarranted 9% Dip

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock is a wonderful bank with a valuation that's too good to pass up after its latest…

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Bank Stocks

Why National Bank Is Surging Right Now

| Chris MacDonald

Here's why investors with a long-term investing time horizon may want to consider National Bank (TSX:NA) in this current environment.

Read more »

think thought consider
Bank Stocks

Canadian Investors: How the Hike in Interest Rates Will Affect Your Portfolio

| Amy Legate-Wolfe

The Bank of Canada doubled interest rates to 0.5%. Here's how it will affect your investments, and what you can…

Read more »

edit Four girl friends withdrawing money from credit card at ATM
Bank Stocks

2 TSX Small Bank Stocks to Buy as Interest Rates Rise

| Tony Dong

A rising interest rate environment could be an excellent time to buy and hold small bank stocks.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

2 TSX Big Bank Stocks to Buy as Interest Rates Rise

| Tony Dong

A rising interest rate environment could be an excellent time to buy-and-hold big bank stocks.

Read more »

retirees and finances
Bank Stocks

56% of Canadians to Push Back Retirement Dates

| Christopher Liew, CFA

A recent survey shows that inflation will weaken the ability of Canadians to save enough and retire by their scheduled…

Read more »

Piggy bank next to a financial report
Bank Stocks

Scotiabank Stock Jumps With 32% Increase in YOY Earnings

| Amy Legate-Wolfe

Scotiabank stock (TSX:BNS)(NYSE:BNS) started climbing higher as the company announced international movement and loan growth.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

TFSA Investors: 2 Big Bank Stocks to Own Before the Peak of Inflation

| Christopher Liew, CFA

Two big bank stocks with killer earnings in Q1 fiscal 2022 are must-own assets for TFSA investors right now.

Read more »

stock data
Bank Stocks

TD Stock Makes US$13.4B Acquisition: What it Means to Investors

| Kay Ng

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) makes a meaningful acquisition in the United States. What should TD investors do?

Read more »

stocks rising
Bank Stocks

TSX Rallies 1.7% for its 2nd-Best Day in 2022

| Christopher Liew, CFA

TSX’s late-month rally showed once more that its heavyweight sectors can overcome massive headwinds.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Top 4 Canadian Bank Earnings to Watch This Week

| Jitendra Parashar

These are the top four Canadian bank earnings to watch this week that could keep their stocks highly volatile.

Read more »

Choose a path
Bank Stocks

Bank Stocks: 2 TSX Superstars to Buy

| Jared Seguin

Looking to pick up shares of some high-quality TSX bank stocks? Find out what makes these two options unique and…

Read more »

clock time
Bank Stocks

2 Top Canadian ETFs to Beat Rising Inflation

| Adam Othman

These two Canadian ETFs could be viable additions to your investment portfolio if you want to hedge against the inflationary…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Bank Stocks

Retirees: Do You Have Half of Your Money in Canadian Bank Stocks?

| Kay Ng

Do you own a lot of Canadian bank stocks? You're not alone. Should you sell and diversify into other quality…

Read more »

grow dividends
Bank Stocks

Rate Hikes Could Stall Dividend Growth of Big Banks in Fiscal 2022

| Christopher Liew, CFA

High interest rates are tailwinds for the Big Banks, although dividend growth could stall in fiscal 2022 if loan growth…

Read more »

stock market
Bank Stocks

TSX to Enter Bear Market if Index Drops 20% or More

| Christopher Liew, CFA

The TSX could drop by 20% or more and enter a bear market if the ongoing geopolitical crisis leads to…

Read more »

thinking
Dividend Stocks

Real Deal to Manage Risk: A Basket of 27 Assets or 1 Big Bank Stock?

| Christopher Liew, CFA

A Big Bank stock with an outstanding dividend track record is the real deal compared with a cheaper, high-yield ETF.

Read more »

A golden egg in a nest
Bank Stocks

Why Millennials Need an RRSP More Than a TFSA

| Amy Legate-Wolfe

Millennials may think a TFSA is all they need for saving, but the RRSP has even more benefits you may…

Read more »

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.