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

stock analysis
Dividend Stocks

1 Top TSX Stock Investors Need to Buy Right Now

| Chris MacDonald

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is among the best long-term growth plays investors can consider right now, and here's why.

Read more »

Modern buildings in business district
Dividend Stocks

3 Stocks To Help You Retire Rich

| Christopher Liew, CFA

Your desire to retire rich isn’t an impossible dream. The Toronto Dominion Bank stock, Enbridge stock, and Power Corp. stock…

Read more »

hand using ATM
Dividend Stocks

BMO (TSX:BMO) Stock: Its Latest Earnings Are Through the Roof!

| Adam Othman

Canadian banking sector has proven once again that it’s rock-solid, and once a member of the big-five that's currently shining…

Read more »

funds, money, nest egg
Dividend Stocks

Make $1 Million in 10 Years With This 1 Stock!

| Amy Legate-Wolfe

Don't wait for a stock market crash. Don't try the next big thing. To get to a million dollars, you…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Today’s Top Buy: Scotiabank

| Chris MacDonald

Scotiabank (TSX:BNS)(NYSE:BNS) has been soaring after earnings. Here's why investors should still consider this high-quality portfolio staple right now.

Read more »

Arrowings ascending on a chalkboard
Dividend Stocks

Toronto-Dominion Bank (TSX:TD) Shuts Down 82 Branches: Stock Soars

| Andrew Button

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock rallied after the company announced it would be closing 82 branches.

Read more »

Value for money
Dividend Stocks

Value Stocks Will Survive a Market Crash

| Andrew Button

Lately, big investors have been going long value stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

Read more »

risk/reward
Dividend Stocks

Bitcoin Too Risky for You? Invest in These 2 Dividend Stocks Instead

| Christopher Liew, CFA

Bitcoin remains risky, despite the astonishing rally in 2021. Dividend payers like Bank of Montreal stock and Canadian Utilities stock…

Read more »

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

Got $1,000? 3 Undervalued TSX Stocks to Buy in March

| Sneha Nahata

Despite the stellar run-up in Canadian equities, a few TSX-listed stocks are looking inexpensive.

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Dividend Stocks

RRSP Investors: A Top Dividend King to Buy in March

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) stock is a perfect buy for RRSP investors before anyone has a chance to talk about rising…

Read more »

funds, money, nest egg
Energy Stocks

The 2 Best Canadian Stocks I Would Buy With $2,000 for 2021

| Nicholas Dobroruka

Forget the tech sector, these two Canadian stocks can do it all. Market-beating growth, exposure to a fast-growing industry, and…

Read more »

retirees and finances
Dividend Stocks

3 Top Canadian Stocks to Buy in March

| Nicholas Dobroruka

Now is the time to be investing in Canadian stocks. The economy is on the cusp of an opportunistic rebound.…

Read more »

grow dividends
Dividend Stocks

Got $1,000? 3 Top TSX Stocks to Buy in March

| Vineet Kulkarni

Markets could continue their upward climb in 2021 after a weak last year. So, it is not too late to…

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Dividend Stocks

Dividend Investing: 2 High-Yielding TSX Kings

| Jared Seguin

When it comes to long-term dividend investing, there are blue-chip TSX stocks with stable yields to target for high returns.

Read more »

analyze data
Bank Stocks

3 Top Canadian Stocks to Forget Risk and Get Rewards

| Amy Legate-Wolfe

If you prefer wealth over risk, then these three stocks are the ones you should be looking into rather than…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Bank Stocks 101: Why You Should Buy Today

| Karen Thomas, MSc, CFA

Bank stocks like Royal Bank and TD Bank stocks continue to be attractive buys for dividend income that's resilient, safe,…

Read more »

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

Royal Bank of Canada (TSX:RY): A Top Pick for RRSP Investors

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) could be one of the better bets for RRSP investors over the next five to…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

How Much Income Will Your CPP Pension Provide in 2021?

| Christopher Liew, CFA

The current CPP enhancements will not significantly increase the pension amount in 2021. However, users can boost their retirement incomes…

Read more »

Cogs turning against each other
Dividend Stocks

2 Super Stocks That Will Survive Market Volatility

| Christopher Liew, CFA

Investors will have peace of mind as long as holdings are in super stocks. Toronto-Dominion Bank stock and the Telus…

Read more »

Upwards momentum
Bank Stocks

Royal Bank (TSX:RY) Stock: Buy, Hold, or Sell After Q1 Earnings?

| Karen Thomas, MSc, CFA

Royal Bank is firing on all cylinders, with strong growth in all of its businesses sending its stock price higher.…

Read more »

new year 2021
Tech Stocks

The 5 Best TSX Stocks to Buy With $5,000 for 2021

| Sneha Nahata

The vaccination, a recovery in demand, and strong secular tailwinds are expected to provide a solid underpinning for growth.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

ALERT: Canadian Banks Are Breaking Out — Buy Them Before the Value Vanishes!

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) and the Big Six Canadian banking stocks are back. Should you buy them as they near their…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

TD Bank (TSX:TD) vs. CIBC (TSX:CM): Which Bank Stock Is a Better Buy After Earnings?

| Stephanie Bedard-Chateauneuf, MBA

TD Bank and CIBC joined major rivals in beating first-quarter profit expectations, thanks to lower provisions for loan losses and…

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

Market Rally: Time to Buy These Big Dividend Value Stocks?

| Kay Ng

Getting excited about the recent market rally? Returns this year won't be like last year. Here's how to think about…

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Retirees: Forget About Vancouver and Toronto! 2 Cities That Are Way Cheaper

| Christopher Liew, CFA

Canadian retirees could cut costs significantly by choosing to relocate in less-expensive cities. To ensure you don’t outlive retirement savings,…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

TFSA Investors: How to Turn $10,000 Into $240,000 in 25 Years

| Andrew Walker

The TFSA is a great tool to set cash aside for retirement. Here's a proven buy-and-hold strategy to build TFSA…

Read more »

Dividend Stocks

RBC (TSX:RY) Smash Estimates in Q1 on Trading Boom

| Stephanie Bedard-Chateauneuf, MBA

RBC (TSX:RY)(NYSE:RY) capital markets operations fueled first-quarter earnings, as volatile equity markets generated record earnings for the division.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

2 Top Canadian Bank Stocks to Buy Right Now for 2021

| Sneha Nahata

The improving economic outlook, lower provisions for bad loans, and credit growth are expected to drive bank stocks.

Read more »

edit CRA taxes
Dividend Stocks

CRA: 3 Mistakes to Avoid When Filing Your 2021 Taxes

| Christopher Liew, CFA

Canadian taxpayers are advised to avoid three mistakes when filing their tax returns in the 2021 tax season. To derive…

Read more »

Canadian Dollars
Tech Stocks

The 3 Best TSX Stocks to Buy with $1,000 for 2021

| Sneha Nahata

These TSX-listed companies have multiple growth vectors that could drive their stocks higher.

Read more »

Dividend Stocks

Got $2,000? The 2 Best Undervalued TSX Stocks to Buy Right Now

| Nicholas Dobroruka

Looking to add a couple of undervalued TSX stocks to your investment portfolio? Here are two top value plays to…

Read more »

edit Woman calculating figures next to a laptop
Bank Stocks

Bank Stocks Post Solid Q1 Earnings

| Karen Thomas, MSc, CFA

Bank stocks Bank of Nova Scotia and Bank of Montreal are rallying, as the banks see a return to pre-pandemic…

Read more »

grow dividends
Bank Stocks

BMO (TSX:BMO) and Scotiabank (TSX:BNS) Smash Estimates in Q1

| Stephanie Bedard-Chateauneuf, MBA

Bank of Montreal (TSX:BMO)(NYSE:BMO) and Scotiabank (TSX:BNS)(NYSE:BNS) kicked off bank earnings season by reporting better-than-expected earnings in Q1.

Read more »

stock analysis
Personal Finance

Don’t Worry About Michael Burry’s Market Selloff Warnings

| Jitendra Parashar

On Sunday, the American investor Michael Burry warned investors of an upcoming market sell-off. But I don’t think long-term investors…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

5 of the Best Canadian Stocks to Buy With $100 This Year

| Nicholas Dobroruka

Here are five top stocks to buy ahead of the Canadian economy’s recovery. The best part is, it won’t cost…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Must Own! 1 Top TSX Bank Stock to Buy in 2021

| Jitendra Parashar

The Canadian banking sector’s earnings season is starting today. It could be a great opportunity for dividend investors to buy…

Read more »

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

How to Prepare Yourself for a Future Stock Market Correction

| Christopher Liew, CFA

A stock market crash in 2021 can be a buying opportunity and a chance to amass millions over time. Among…

Read more »

Upwards momentum
Tech Stocks

3 Growth Stocks to Add to Your Portfolio

| Jed Lloren

When investors think of growth stocks, they often turn to high-flying speculative companies. However, there are growth stocks that can…

Read more »

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

Got $2,000? The 2 Best TSX Stocks to Buy for 2021 and Beyond

| Sneha Nahata

The recovery in demand, the vaccination, and an improving economic outlook provide a strong base for growth in 2021.

Read more »

Female hand holding piggy bank. Save money and financial investment
Bank Stocks

Earnings Alert! 5 Top TSX Stocks to Watch This Week

| Jitendra Parashar

Here’re five major Canadian banks that will release their latest quarterly earnings this week. Let’s take a closer look at…

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.