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

edit Sale sign, value, discount
Dividend Stocks

3 Deep-Value Stocks on Sale Today

| Andrew Button

Now is a good time to research deep-value stocks like Suncor Energy Inc (TSX:SU)(NYSE:SU).

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

3 Top Canadian Dividend Stocks to Buy in October 2021

| Vineet Kulkarni

While dividend stocks are relatively slow moving, it bodes well when uncertainties in the broader markets increase. Here are some…

Read more »

funds, money, nest egg
Dividend Stocks

3 Under-$100 Canadian Dividend Stocks I’d Buy Now

| Sneha Nahata

These three high-quality dividend stocks could help investors generate reliable and growing dividend income. 

Read more »

money cash dividends
Bank Stocks

2 Top TSX Dividend Stocks to Buy on a Pullback in October

| Andrew Walker

Investors can take advantage of a market correction to buy these top TSX dividend stocks.

Read more »

question marks written reminders tickets
Tech Stocks

Down Over 10%: Should You Buy These 4 High-Growth Stocks?

| Rajiv Nanjapla

The steep correction in these four high-growth stocks provides an excellent entry point for long-term investors.

Read more »

Retirement
Dividend Stocks

3 Top Stocks for a Rich Retirement

| Andrew Button

If you're looking to retire wealthy, it wouldn't hurt to own bank stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

Read more »

hand using ATM
Dividend Stocks

Bank of Canada: Let Inflation Run Hot for the Rest of 2021

| Christopher Liew, CFA

The Bank of Canada will likely allow inflation to run hot until the end of 2021. However, if you fear…

Read more »

Young woman sat at laptop by a window
Dividend Stocks

Interest Outlook: Rate Hike Coming in Q4 2022

| Christopher Liew, CFA

The forecasts for the interest rate hike are varied, but the consensus is Q4 2022. Investors looking for buying opportunities…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Top 3 Growth and Income Stocks to Buy Now

| Sneha Nahata

With ample liquidity and lower interest rates, the stock market is an exciting place to be at the moment.

Read more »

Canadian Dollars
Coronavirus

3 TSX Stocks to Invest $3,000 in Right Now

| Sneha Nahata

These TSX stocks will likely gain from improved economic environment and strength in base business.

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

2 Top Canadian Bank Stocks to Consider Right Now

| Chris MacDonald

Here's why long-term investors may want to consider these top two Canadian bank stocks in this current investing environment today.

Read more »

Watch for the Warning Signs Stock Market Prices Trends 3d Illustration
Dividend Stocks

2 Top Stocks to Buy in a Falling Market

| Christopher Liew, CFA

A falling market isn’t as worrisome if your core holdings are resilient and dependable income stocks. Buy the Canadian Imperial…

Read more »

Dice engraved with the words buy and sell
Dividend Stocks

Top 3 Passive Income Stocks to Buy in October

| Nicholas Dobroruka

The market’s valuation has me searching for more value-oriented buys this month. These passive income stocks are on my radar.

Read more »

financial freedom sign
Bank Stocks

Got $1,000? This Unstoppable TSX Stock Could Make You Richer

| Sneha Nahata

This TSX stock has the potential to outperform the TSX60 Index by a wide margin and make its investors richer.

Read more »

value for money
Dividend Stocks

3 Incredible Bargains to Buy in October 2021

| Chris MacDonald

Looking for incredible bargains in today's overvalued market? These three top Canadian stocks are among the best for such investors…

Read more »

money cash dividends
Dividend Stocks

3 Dividend Stocks You Should Keep for Decades

| Christopher Liew, CFA

Not all dividend-paying companies can sustain payouts for decades. However, the Bank of Montreal stock, BCE stock, and Canadian Utilities…

Read more »

Index funds
Dividend Stocks

Dividend Stocks: 2 TSX Banking Superstars

| Jared Seguin

Looking to pick up shares of some top Canadian dividend stocks? These two banking giants could be great options to…

Read more »

Man holding magnifying glass over a document
Bank Stocks

Why Shares of National Bank of Canada Fell Over 2.5% in September

| Aditya Raghunath

National Bank of Canada stock is up over 35% in 2021, despite its negative returns in September.

Read more »

sad concerned deep in thought
Bank Stocks

Why Royal Bank of Canada Fell 3% in September

| Aditya Raghunath

Shares of the Royal Bank of Canada have fallen close to 3% in the last month. But its financials remain…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

2 Bank Stocks to Own for the Rest of Your Life

| Christopher Liew, CFA

There are assets you can own for life to earn everlasting income. Canada’s banking sector is a solid investment ground,…

Read more »

analyze data
Dividend Stocks

3 Reasons to Buy Scotiabank (TSX:BNS) Stock Right Now

| Adam Othman

Scotiabank stock could be an ideal stock to add to your investment portfolio, especially if you are just starting investing…

Read more »

edit U-turn
Bank Stocks

Why TD Bank Stock Rebounded in September

| Amy Legate-Wolfe

TD Bank (TSX:TD)(NYSE:TD) stock has yoyoed over the last few months, so what's been happening in September that investors should…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Which Canadian Bank Stock Will Make the Biggest Dividend Hike?

| Kay Ng

The Big Six Canadian bank stocks are bound to make a big dividend hike after quarters of dividend freezes, aren't…

Read more »

money cash dividends
Tech Stocks

The Top 4 Under-$100 Canadian Stocks to Buy in October

| Nicholas Dobroruka

The market is richly valued but you don’t need to be sitting on the sidelines. These four Canadian stocks should…

Read more »

Target. Stand out from the crowd
Bank Stocks

1 Great TSX Stock I’d Buy as Inflation Lingers

| Joey Frenette

Inflation probably isn't going anywhere anytime soon, so Canadian investors should look to cheap equities like Bank of Montreal (TSX:BMO)(NYSE:BMO).

Read more »

edit CRA taxes
Bank Stocks

Will the 3% Surtax Hurt Bank and Insurance Stocks?

| Christopher Liew, CFA

Banks and insurance companies will pay higher corporate taxes if the government passes the 3% surtax post-election. However, it should…

Read more »

Woman has an idea
Dividend Stocks

2 of the Smartest Canadian Stocks to Buy and Hold Forever

| Christopher Liew, CFA

The rising market volatility could lead to a stock market correction in Q4 2021. If you want to stay invested,…

Read more »

Canadian Dollars
Energy Stocks

Got $1,000? 3 Top Canadian Stocks to Buy in October

| Rajiv Nanjapla

These three Canadian stocks could be an excellent addition to your portfolio.

Read more »

analyze data
Bank Stocks

3 Top TSX Stocks for October

| Aditya Raghunath

Investors can look to invest in undervalued stocks such as Toronto-Dominion Bank to derive market-beating gains in the next year.

Read more »

Target. Stand out from the crowd
Dividend Stocks

Why TD Bank Stock Remains a Hot Stock to Buy Right Now

| Chris MacDonald

Here's why I think long-term investors should consider Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock right now.

Read more »

stock analysis
Dividend Stocks

3 Post-Election Stocks to Watch

| Adam Othman

The elections are over, and even though the power didn't shift too much, the stock market might feel the impact…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

3 Top Bank Stocks That Just Went on Sale

| Ambrose O'Callaghan

Bank stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) look discounted after a recent dip in the broader market.

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

2 Banking Stocks to Consider as the Sector Slumps

| Adam Othman

The downward motion of Canadian banks was short-lived, as most stocks have already begun to bounce back. And thanks to…

Read more »

Early retirement handwritten in a note
Tech Stocks

TFSA Investors: 3 Canadian Stocks I’d Buy to Retire Early

| Nicholas Dobroruka

If you’re looking to retire early, here’s a list of three top Canadian stocks that should be on your watch…

Read more »

value for money
Dividend Stocks

Top 3 Undervalued TSX Stocks to Buy Right Now!

| Sneha Nahata

A few fundamentally strong stocks still look attractive on the valuation front, indicating further upside. 

Read more »

Bank sign on traditional europe building facade
Bank Stocks

TD Bank Stock: Is Canada’s Top Bank Stock Destined to Fall?

| Karen Thomas, MSc, CFA

Here's why Motley Fool investors should wait to buy TD Bank and Royal Bank stock: buy on weakness to maximize…

Read more »

Retirement
Dividend Stocks

2 Top TSX Stocks to Start a Self-Directed Retirement Portfolio

| Andrew Walker

These two top TSX stocks have delivered fantastic returns for long-term investors. Here's why they still look like good stocks…

Read more »

Path to retirement
Dividend Stocks

Is it Wise to Retire With $0 Savings and Only Your CPP Pension?

| Christopher Liew, CFA

The CPPIB wants CPP users to realize that the pension is not a retirement plan. You can’t retire with zero…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

This Is the Top Performer of the Big 6 Canadian Banks in 2021

| Aditya Raghunath

Shares of National Bank of Canada have surged close to 40% in the first nine months of 2021, making it…

Read more »

investment research
Tech Stocks

Wherever the Market Goes, I’m Buying These 3 TSX Stocks

| Sneha Nahata

Despite the market’s uncertain trajectory, I am bullish on these three TSX stocks.

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.