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

retirees and finances
Bank Stocks

25% of Canadians Fear Outliving Their Savings in Retirement

| Christopher Liew, CFA

Canadians who fear outliving their savings should start investing in dividend stocks as early as now to fight inflation and…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

3 Top Bank Stocks to Buy Ahead of Earnings

| Ambrose O'Callaghan

I’m looking to snatch up top bank stocks like Bank of Montreal (TSX:BMO)(NYSE:BMO) as the first round of bank earnings…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Individual Bank Stocks vs ETFs: Which Is Better for Investors?

| Tony Dong

ETFs are an easy, capital efficient way of gaining sector exposure, but sometimes picking individual stocks may be a better…

Read more »

Caution, careful
Bank Stocks

1 Bank Stock to Own if Recession Follows the Rate Hike in 2022

| Christopher Liew, CFA

Income investors may want to take a position in a top bank stock as soon as possible because a recession…

Read more »

investment research
Dividend Stocks

3 Value Stocks to Buy Amid Rising Volatility

| Rajiv Nanjapla

Given their attractive valuations, stable cash flows, and healthy growth potential, these three values stocks could be excellent additions to…

Read more »

A golden egg in a nest
Dividend Stocks

RRSP Investors: 3 Steady Stocks to Anchor Your Retirement Portfolio

| Adam Othman

Steady stocks can offer more than just capital preservation, a key requirement for a retirement portfolio. They can provide a…

Read more »

edit CRA taxes
Bank Stocks

RRSP Users: 14 Days to Lower Tax Bill in 2022

| Christopher Liew, CFA

RRSP users who make a contribution to their accounts on or before the deadline will surely reduce their tax bills…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Bank Stocks

Scotiabank vs. RBC: Why Scotiabank Comes Out Ahead

| Chris MacDonald

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) or Royal Bank of Canada (TSX:RY)(NYSE:RY) -- here's why Scotiabank comes out ahead.

Read more »

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

2 Canadian Banking Giants to Crush Inflation

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are intriguing Canadian banking studs that may be worth loading up on…

Read more »

money cash dividends
Tech Stocks

Save Tax: Buy 3 TSX Stocks in an RRSP Before March 1

| Puja Tayal

Are you worried about your 2021 income tax bill? You still have some time left to save taxes with your…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Tech Stocks

3 Top Growth Stocks That You Should Add to Your TFSA Account

| Rajiv Nanjapla

Given their healthy growth prospects, these three Canadian stocks could be an excellent addition to your TFSA account.

Read more »

hand using ATM
Bank Stocks

Rate-Hike Fallout? A Big 6 Bank Stock to Own Today

| Christopher Liew, CFA

The TSX’s dividend pioneer will not disappoint income investors even if economic growth slows down as an offshoot of higher…

Read more »

risk/reward
Bank Stocks

3 Reasons to Invest in Bank Stocks Right Now

| Puja Tayal

Are you confused about whether or not to invest in banks? Here are three reasons to invest in bank stocks…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

2 TSX Banking Stocks to Buy in February 2022

| Aditya Raghunath

Value investors can look to buy shares of TD Bank and National Bank at current prices.

Read more »

money cash dividends
Dividend Stocks

Will High Interest Rates Support Dividend Growth in 2022?

| Christopher Liew, CFA

Some market analysts believe that despite the looming interest rate hike, corporate profitability and free cash flow generation could support…

Read more »

think thought consider
Bank Stocks

Top February TSX Stock Pick: TD Bank Is a Buy for Passive Income

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) is a great way to score real returns in an inflationary environment this 2022. Passive income investors…

Read more »

analyze data
Bank Stocks

Why Scotiabank Is a Dividend Stock to Buy Now and Never Sell

| Chris MacDonald

Here's why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is a top dividend stock I'm considering right now.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Why CIBC Stock Is the Best Big Six Bank to Buy

| Amy Legate-Wolfe

CIBC (TSX:CM)(NYSE:CM) stock is up 45% in the last year, yet it's still the fifth-largest Big Six bank. But this…

Read more »

crypto, chart, stocks
Bank Stocks

Why “Boring” Bank Stocks Are Beating Cryptocurrency

| Andrew Button

Boring bank stocks like the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are beating cryptocurrency in 2022.

Read more »

Target. Stand out from the crowd
Bank Stocks

Another Reason to Buy TD Stock Right Now

| Chris MacDonald

Here's one more reason why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock could be a great portfolio addition right now.

Read more »

exchange traded funds
Bank Stocks

2 Passive Income Funds to Thrive in a Rocky Stock Market in 2022

| Joey Frenette

It’s been a rocky start to the year for stock markets, to say the least. Indeed, passive income at a…

Read more »

A close up image of Canadian $20 Dollar bills
Bank Stocks

1 Top Bank Stock for Investors Looking to Boost Their Passive Income in 2022

| Chris MacDonald

As we battle uncertainty and higher rates, this bank stock could help add defensive passive income over time.

Read more »

stocks rising
Bank Stocks

Big 6 Bank Stocks Could Soar With Interest Rate Hikes

| Christopher Liew, CFA

Canadians can realize significant capital gains from Big Bank stocks in 2022 as analysts forecast higher share prices due to…

Read more »

Technology
Bank Stocks

My Best Value Pick to Buy Amid the Market Plunge

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) may very well be the ultimate bargain buy in 2022, as value looks to outshine growth stocks…

Read more »

money while you sleep
Dividend Stocks

Value vs. Return Potential: 3 Stocks for the Right Balance

| Adam Othman

Understanding the fundamentals and factors behind the undervaluation of assets is imperative in making the right value investment decision.

Read more »

Target. Stand out from the crowd
Bank Stocks

My Top Canadian Bank Stock to Buy for Dividend Growth

| Chris MacDonald

Here's why investors looking for a top Canadian bank stock to buy on the basis of dividend growth ought to…

Read more »

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

2 Top Canadian Bank Stocks to Buy Right Now

| Chris MacDonald

These two top Canadian bank stocks are among the best options for investors seeking income, growth, and safety right now.

Read more »

consider the options
Bank Stocks

Interest Rate 2022: 8 Hikes Needed to Cool Inflation

| Christopher Liew, CFA

With inflation rising at the fastest clip in decades, Canada’s big banks suggest a series of rate hikes in 2022…

Read more »

thinking
Bank Stocks

Will TD Bank Stock Keep Outperforming in 2022?

| Andrew Button

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) outperformed in 2021. Can it keep up the momentum in 2022?

Read more »

Increasing yield
Bank Stocks

2 Undervalued Bank Stocks That Yield Over 3.5%

| Adam Othman

Canadian banks have the reputation of being conservative and safe, so the valuation rarely moves too much in either direction…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

2 Bank Stocks That Could Rocket Higher in 2022

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) is a severely undervalued bank stock that Canadian investors may wish to stash atop their watchlists in…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Passive Income: 3 Bank Stocks for TFSA Wealth

| Andrew Button

If you want passive income, consider bank stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY).

Read more »

Bank sign on traditional europe building facade
Bank Stocks

TFSA Investors: 2 Top Canadian Bank Stocks to Buy

| Karen Thomas, MSc, CFA

TFSA investors can make use of their TFSA contribution limit by buying TD Bank stock and CIBC stock, which offer…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

1 Small Canadian Bank Providing High-Risk, High-Reward Upside

| Chris MacDonald

Here's why long-term investors seeking value and income may want to consider National Bank (TSX:NA) as a top Canadian bank…

Read more »

Business man on stock market financial trade indicator background.
Bank Stocks

Why Toronto-Dominion Bank Stock Rose 37% in 2021

| Vishesh Raisinghani

TD Bank (TSX:TD)(NYSE:TD) stock is up 37% over the past year because of organic earnings growth.

Read more »

grow dividends
Bank Stocks

Why Royal Bank of Canada Stock Rose 30% in 2021

| Vishesh Raisinghani

Royal Bank of Canada (TSX:RY)(NYSE:RY) stock is up because of growing earnings.

Read more »

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

Why National Bank of Canada (TSX:NA) Stock Climbed 39% in 2021

| Ambrose O'Callaghan

The top Quebec bank stock National Bank of Canada (TSX:NA) put together a great performance in 2021. Can that continue…

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 Canadian Imperial Bank of Commerce Stock Climbed 39% in 2021

| Amy Legate-Wolfe

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) climbed well into the double digits and is now boosting its dividend while remaining…

Read more »

calculate and analyze stock
Bank Stocks

Why Bank of Montreal Stock Rallied 41% in 2021

| Jitendra Parashar

Bank of Montreal (TSX:BMO)(NYSE:BMO) stock could continue soaring in 2022. Here’s why.

Read more »

analyze data
Bank Stocks

Why Bank of Nova Scotia (TSX:BNS) Stock Soared 30% in 2021

| Andrew Walker

Bank of Nova Scotia stock ended 2021 with solid earnings and a large dividend increase.

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.