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. 

[KevelPitch adtype=151]

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

Top Articles

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 »

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 »

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 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 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 »

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 »

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

Bank Stocks

Not-Yet Retired Canadians: Do This 1 Thing to Lessen Anxiety

| Christopher Liew, CFA

Retiring Canadians can lessen anxiety by refocusing on their financial futures and creating a fail-safe retirement plan.

Read more »

Bank Stocks

New Investors: 1 Stock Is All You’ll Need to Bank on the Big 6

| Joey Frenette

BMO Equal Weight Canadian Banks ETF (TSX:ZEB) is an intriguing ETF for investors seeking broader exposure to the Big Six…

Read more »

Bank Stocks

Load Up on These 2 Bank Stocks

| Adam Othman

The Canadian banking stocks are coming down from one of their most substantial bullish phases in the last decade. Now…

Read more »

Bank Stocks

3 Cheap Bank Stocks to Buy Today

| Ambrose O'Callaghan

Canadians may want to target top discounted bank stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and others in late April.

Read more »

Bank Stocks

TD Bank Stock: This Blue-Chip Company Remains a Top Bet in 2022

| Aditya Raghunath

TD Bank has outpaced the TSX in the last 10 years. Here's why it remains a top bet for long-term…

Read more »

Bank Stocks

Big 5 Bank Stocks: Top 2 Picks in Canada

| Christopher Liew, CFA

The financial sector isn’t among the TSX’s top performers year to date, although two Big Five bank stocks are must-own,…

Read more »

Bank Stocks

Is Bank of Nova Scotia (TSX:BNS) Stock Undervalued?

| Tony Dong, MSc, CETF®

Like many of the Big Five Canadian bank stocks, BNS has been a solid performer. Read this analysis if you're…

Read more »

Bank Stocks

3 Bank Stocks Offering Insane Value on the TSX Today

| Amy Legate-Wolfe

Bank stocks are some of the best buys out there right now, trading in value territory. But I'd say these…

Read more »

Bank Stocks

ZEB vs. XFN: Which Financial Sector ETF Is the Better Buy for Canadian Investors?

| Tony Dong, MSc, CETF®

Canada’s two most popular financial sector ETFs go head to head.

Read more »

Bank Stocks

Canadian Banks Face Special Tax on Pandemic Profits: What Should You Do?  

| Puja Tayal

The 2022 budget slapped Canadian banks and life insurers with a special tax on pandemic profits. How will this impact…

Read more »

calculate and analyze stock
Bank Stocks

Is Bank of Montreal (TSX:BMO) Stock Undervalued?

| Tony Dong, MSc, CETF®

Like many of the Big Five Canadian bank stocks, BMO has been a solid performer. Read this analysis if you're…

Read more »

Bank Stocks

Great Buy: This Big Bank Is on Sale Now!

| Demetris Afxentiou

Canada’s big banks are always great buys. Here’s a big bank on sale now that boasts solid growth and crazy…

Read more »

Bank Stocks

1 Top Canadian Banking Giant to Watch Now

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) stock looks like a dirt-cheap, blue-chip bank stock that's too cheap to pass up, even as recession…

Read more »

Bank Stocks

2 Top Bank Stocks to Buy in Canada

| Christopher Liew, CFA

Two Canadian bank stocks with strong tailwinds are the top choices today in the sector and considered by many as…

Read more »

Technology
Bank Stocks

Should You Buy Bank of Montreal (TSX:BMO) on the Dip?

| Ambrose O'Callaghan

Canadian investors may want to snatch up Bank of Montreal (TSX:BMO)(NYSE:BMO) stock on the dip after the recent rate hike.

Read more »

Bank Stocks

The Cheapest Canadian Bank Stock You Can Buy Now

| Kay Ng

Canadian bank stocks are solid anchors to investors' long-term portfolios. This is the cheapest Canadian bank stock right now.

Read more »

edit Safe pig, protect money
Bank Stocks

CIBC (TSX:CM) Stock: A 4% Ultra-Safe Yield

| Andrew Button

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) sports a safe, well-covered 4% yield.

Read more »

Bank Stocks

ALERT: Here’s Why I’m Buying Bank Stocks After the Rate Hike

| Ambrose O'Callaghan

The Bank of Canada (BoC) rate hike should spur investors to snag top bank stocks like Royal Bank of Canada…

Read more »

Bank Stocks

3 Bank Stocks That Are a No-Brainer Buy

| Adam Othman

If you plan to hold them long term, some bank stocks might even be good buys when they are relatively…

Read more »

Bank Stocks

CIBC Stock: Too Cheap to Ignore?

| Andrew Walker

CIBC trades at an attractive multiple after the recent pullback in the stock price.

Read more »

clock time
Bank Stocks

Is it Time to Buy Bank of Nova Scotia Stock?

| Andrew Walker

Bank of Nova Scotia stock is starting to look cheap.

Read more »

Bank Stocks

3 Canadian Bank Stocks to Add for Stability Right Now

| Chris MacDonald

Here are three top Canadian bank stocks I think investors with a long-term investing time horizon may want to consider…

Read more »

Bank Stocks

Should You Buy TD Bank or Royal Bank Stock Now?

| Andrew Walker

Canadian bank stocks are under pressure. Is this the right time to buy?

Read more »

Bank Stocks

Should You Buy Bank of Nova Scotia Stock?

| Jed Lloren

Bank of Nova Scotia is one of the most popular stocks in Canada. Should you buy it today?

Read more »

Bank Stocks

TD Bank Stock: Should You Buy the Dip?

| Ambrose O'Callaghan

TD Bank (TSX:TD)(NYSE:TD) stock has slipped to start 2022, as the promise of interest rate hikes has rattled the financial…

Read more »

Bank Stocks

With or Without a Surtax: 2 Big Bank Stocks to Own in Your TFSA

| Christopher Liew, CFA

Despite the new tax measure, or surtax, on profitable financial institutions, two big bank stocks remain ideal anchors for TFSA…

Read more »

Stocks for Beginners

My New List of Top ETFs for April 2022

| Puja Tayal

ETF buying is a good way to get stock market returns without studying the intricacies of the market. Here’s my…

Read more »

Bank Stocks

Bank of Montreal (TSX:BMO): A Superb Growth and Income Stock

| Demetris Afxentiou

There are few stocks on the market that can provide superb growth and income potential. Bank of Montreal (TSX:BMO)(NYSE:BMO) can…

Read more »

analyze data
Bank Stocks

1 TFSA Stock and 1 RRSP Stock Every Canadian Investor Should Buy

| Amy Legate-Wolfe

Canadian investors seeking funds in the short and long term need to find the right TFSA stock and RRSP stock…

Read more »

Bank Stocks

2 Canadian Banks Available at Attractive Valuations

| Rajiv Nanjapla

Given the favourable environment and attractive valuations, I expect these two banking stocks to outperform over the next two years.

Read more »

Bank Stocks

Is TD Bank (TSX:TD) Still a Good Dividend Stock to Start a TFSA Focused on Passive Income?

| Andrew Walker

TD Bank has historically been a great stock to own for passive income. Should new TFSA investors buy TD stock…

Read more »

Bank Stocks

Bank of Montreal (TSX:BMO): 1 of My Favourite Stocks to Buy as the Fed Hikes Rates

| Joey Frenette

Bank of Montreal (TSX:BMO)(NYSE:BMO) is a value stock that could pay massive dividends, even if a 2023 recession is just…

Read more »

Canadian stocks are rising
Bank Stocks

TD Bank Stock – Is the Flat Yield Curve a Threat?

| Andrew Button

Some say the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock might be threatened by a flat yield curve. Is it?

Read more »

investment research
Bank Stocks

Value Investors: The Best Big Six Bank to Buy Right Now

| Amy Legate-Wolfe

National Bank stock (TSX:NA) offers the best price for value investors, but the real question is whether that's enough to…

Read more »

Bank Stocks

TD Stock: Discounted and Buyable After This Week’s Plunge Below $100

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) stock isn't the only bank that's falling fast, but it may be among the first to bounce…

Read more »

Bank Stocks

New Canadian Bank Tax: Should You Buy or Sell Bank Stocks Now?

| Andrew Walker

Canadian bank stocks have taken a big hit in the past two months. Is the pullback overdone?

Read more »

Bank Stocks

Looking for TFSA Anchors? 3 Big Banks Are in Expansion Mode

| Christopher Liew, CFA

Canadians looking for TFSA anchors can pick from three big bank stocks with considerable future growth opportunities.

Read more »

Bank Stocks

TD Stock’s Recent Move Proves Why it’s the Best of Bank Stocks

| Amy Legate-Wolfe

TD (TSX:TD)(NYSE:TD) stock is banking on growth from the United States, introducing several new ETFs for investors to consider on…

Read more »

woman analyze data
Bank Stocks

1st Time Investors: Top TSX Bank Stocks to Buy in April 2022

| Vineet Kulkarni

Canadian bank stocks look attractive at the moment with rates on the rise.

Read more »

edit Safe pig, protect money
Bank Stocks

Retirees: Get Defensive With TD Stock Right Now

| Chris MacDonald

Here's why retirees may want to consider Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock in this rather uncertain environment.

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.