Motley Fool Premium
  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. 

[KevelPitch adtype=151]

Check back here for the most up to date information about bank stocks in Canada.

Recent Bank Stocks News

man touches brain to show a good idea
Bank Stocks

CIBC Vs. Royal Bank Stock: Where Should You Park Your Investment Capital?

| Amy Legate-Wolfe

When it comes to choosing between two strong banks, Canadian Imperial Bank of Commerce (TSX:CM) and Royal Bank of Canada…

Read more »

An investor uses a tablet
Bank Stocks

Where Will TD Stock Be in 5 Years?

| Jitendra Parashar

Despite ongoing challenges, TD Bank’s strong financial base and focus on growth initiatives could help its stock touch new heights…

Read more »

four people hold happy emoji masks
Bank Stocks

Is BNS Stock a Buy, Sell, or Hold for 2025?

| Andrew Walker

Bank of Nova Scotia is up more than 20% in 2024. Are more gains on the way?

Read more »

Hourglass and stock price chart
Stocks for Beginners

This Bank Stock Could Be the Best Investment of the Decade

| Amy Legate-Wolfe

TD stock may look problematic now, but long-term investors should see this as an opportunity to lock in a strong…

Read more »

sale discount best price
Bank Stocks

It’s Time to Buy: 1 Canadian Stock That Hasn’t Been This Cheap in Years

| Amy Legate-Wolfe

TD stock may be going through rough waters, but it's likely to see the other side, making now a great…

Read more »

open vault at bank
Dividend Stocks

Outlook for National Bank of Canada Stock in 2025

| Amy Legate-Wolfe

National Bank stock may not be the largest bank, but going into 2025 it could offer some of the largest…

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Bank Stocks

A Canadian Stock to Watch as 2025 Kicks Off

| Joey Frenette

TD Bank (TSX:TD) stock looks like a great watchlist stock for 2025.

Read more »

man touches brain to show a good idea
Bank Stocks

If I Could Only Buy and Hold a Single Stock, This Would Be it

| Amy Legate-Wolfe

Royal Bank stock's mix of dividends, growth, and stability makes it a compelling choice.

Read more »

Pile of Canadian dollar bills in various denominations
Stocks for Beginners

Is Royal Bank of Canada Stock a Buy for its 3.3% Dividend Yield?

| Amy Legate-Wolfe

Royal Bank stock has long been one of the best buys on the TSX, and that remains the case after…

Read more »

senior relaxes in hammock with e-book
Bank Stocks

Outlook for Bank of Nova Scotia Stock in 2025

| Jitendra Parashar

Here’s what makes Bank of Nova Scotia (TSX:BNS) a really attractive stock for income-focused, long-term investors heading into 2025.

Read more »

Lights glow in a cityscape at night.
Bank Stocks

2 Canadian Bank Stocks to Buy at a Discount

| Andrew Walker

These Canadian bank stocks might be attractive heading into next year.

Read more »

dividends can compound over time
Bank Stocks

1 Growth Stock Down 11% to Buy Right Now

| Andrew Button

EQB Inc (TSX:EQB) is a growth stock that took a beating recently. Here's why it might be a good dip…

Read more »

up arrow on wooden blocks
Bank Stocks

This Canadian Bank Stock Has Nearly Doubled in 14 Months

| Joey Frenette

CIBC (TSX:CM) stock is really gaining in momentum lately. The stock looks like a great buy going into 2025!

Read more »

A worker uses a double monitor computer screen in an office.
Bank Stocks

Better Bank Stock: TD vs EQB Inc

| Andrew Button

Toronto-Dominion Bank (TSX:TD) is a giant in banking, but EQB Inc (TSX:EQB) is growing faster.

Read more »

data analyze research
Bank Stocks

TD Bank: Buy, Sell, or Hold in 2025?

| Andrew Walker

TD stock is down about 12% in 2024. Is it now oversold?

Read more »

ETF stands for Exchange Traded Fund
Bank Stocks

A Canadian Bank ETF I’d Buy With $1,000 and Hold Forever

| Tony Dong, MSc, CETF®

This unique Hamilton ETF gives you 1.25x leveraged exposure to Canada's Big Six bank stocks.

Read more »

trends graph charts data over time
Bank Stocks

2 Strong Bank Stocks to Consider Before Year-End

| Jitendra Parashar

Buying these two top Canadian bank stocks before the year-end could help you receive strong returns on your investments in…

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Stocks for Beginners

How to Grow Your TFSA Well Past the Average

| Amy Legate-Wolfe

Need to catch up quick with your TFSA? Consider some regular contributions to this top bank stock, as well as…

Read more »

Beware of bad investing advice.
Bank Stocks

Shocking Declines: Canadian Stocks That Disappointed Investors in 2024

| Aditya Raghunath

TD Bank and Telus International are two TSX stocks that are trading below 52-week highs in December 2024.

Read more »

Investor reading the newspaper
Bank Stocks

These Cheap Canadian Bank Stocks Offer 5% Yields

| Joey Frenette

Bank of Nova Scotia (TSX:BNS) and another 5%-yielder are worth banking on for the long run.

Read more »

coins jump into piggy bank
Stocks for Beginners

Is Laurentian Bank Stock a Buy for its 6.5% Dividend Yield?

| Amy Legate-Wolfe

Laurentian Bank stock may have a stellar dividend yield, but there are several risks involved with taking on this stock…

Read more »

a person looks out a window into a cityscape
Bank Stocks

Should You Buy TD Bank Stock While it’s Below $76?

| Brian Paradza, CFA

TD Bank stock dips below $76! With a 5.6% yield and robust growth prospects, is this the buy opportunity contrarian…

Read more »

TD Bank stock
Bank Stocks

TD Bank Stock: Buy, Sell or Hold for 2025?

| Iain Butler

TD Bank stock slipped after reporting fourth-quarter 2024 earnings.

Read more »

woman analyze data
Bank Stocks

1 Marvellous Canadian Dividend Stock Down 17% to Buy and Hold Forever

| Amy Legate-Wolfe

TD stock has hit a rough patch. It's trading near 52-week lows, with shares dropping after recent earnings. But what…

Read more »

Paper Canadian currency of various denominations
Bank Stocks

Is BMO Stock a Buy Now?

| Andrew Walker

BMO stock recently hit a 12-month high. Are more gains on the way?

Read more »

open vault at bank
Stocks for Beginners

Are TD Stock and BNS Stock Smart Buys for Canadian Investors?

| Amy Legate-Wolfe

TD stock and Scotiabank both delivered earnings this week, so let's look at whether now is the time to buy,…

Read more »

calculate and analyze stock
Bank Stocks

Outlook for Bank of Montreal Stock in 2025

| Andrew Walker

Bank of Montreal just hit a 12-month high. Are more gains on the way?

Read more »

Man data analyze
Bank Stocks

Should You Buy TD Stock While it’s Below $75?

| Andrew Walker

TD Bank just plunged on its fiscal Q4 2024 earnings news. Is TD stock now oversold?

Read more »

Confused person shrugging
Bank Stocks

Where Will TD Stock Be in 5 Years?

| Amy Legate-Wolfe

TD stock surprised investors, stating it would not be providing guidance. So, what should investors do now?

Read more »

BNS stock
Bank Stocks

Is Scotiabank Stock a Buy?

| Iain Butler

The Big 6 bank released its fourth-quarter earnings this week, and Motley Fool analysts react.

Read more »

customer uses bank ATM
Bank Stocks

If I Could Only Buy and Hold a Single Stock, This Would Be It

| Kay Ng

National Bank of Canada is a stock I'd consider buying whenever it trades at a reasonable valuation.

Read more »

data analyze research
Bank Stocks

Is BNS Stock a Buy?

| Andrew Walker

Bank of Nova Scotia is up more than 20% in 2024. Are more gains on the way?

Read more »

Bank Stocks

BNS Stock Takes a Hit After Earnings Miss: Is it Time to Buy or Bail?

| Jitendra Parashar

While all wasn’t rosy about its recent quarterly results, the short-term setbacks might not affect BNS stock’s long-term growth outlook.

Read more »

Young Boy with Jet Pack Dreams of Flying
Bank Stocks

How Should a Beginner Invest in Stocks? 1 Simple Investment for a Lifetime of Security

| Kay Ng

For new investors, Canadian bank stocks are some of the best investments you can buy with peace of mind on…

Read more »

dividend growth for passive income
Stocks for Beginners

Here’s the Average TFSA Balance at Age 34 in Canada

| Kay Ng

Curious how your TFSA balance compares to others? Here's how you could increase your wealth tax-free.

Read more »

how to save money
Dividend Stocks

Top Canadian Financial Stocks to Buy Now

| Amy Legate-Wolfe

These financial stocks are top choices for those looking for long-term income, along with security for life!

Read more »

analyze data
Bank Stocks

Is Bank of Nova Scotia Stock a Good Buy?

| Demetris Afxentiou

Is Bank of Nova Scotia (TSX:BNS) a good buy? Here's a look at a few reasons you may want to…

Read more »

customer uses bank ATM
Bank Stocks

Canada’s Big Bank Stocks: How to Find the Best One for You?

| Demetris Afxentiou

Considering an investment in Canada's big bank stocks? Here's a look at some of the best options to buy right…

Read more »

chart reflected in eyeglass lenses
Bank Stocks

Best Stock to Buy Right Now: TD vs Bank of Nova Scotia?

| Andrew Walker

TD and Bank of Nova Scotia have underperformed their large peers over the past five years. Is one oversold right…

Read more »

money goes up and down in balance
Bank Stocks

Is Toronto-Dominion Bank Stock a Good Buy?

| Andrew Walker

TD stock is underperforming its peers in 2024. Will 2025 be different?

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.