Bank stocks are financial institutions that are licensed to accept and hold deposits, issue loans, and sell financial products (like GICs).
In the spectrum of different types of stocks, banks stocks fall on the low-risk side. Their financials are usually solid (they are, after all, banks), and they often pay reliable dividends with payouts increasing every year. Though they’re not immune to market downturns, they typically fare better than higher risk investments, like cyclical or tech stocks.
In 2025, the Canadian banking industry continued to show resilience, supported by strong liquidity and improving earnings momentum. Deposits at major Canadian banks rose 10% year-over-year from March 2024 to March 2025, reflecting renewed consumer and business confidence. Earnings performance also strengthened, with the Big Six banks reporting a 13.4% quarter-over-quarter increase in adjusted earnings in Q3 2025, driven by higher revenue and lower loan-loss provisions.
Mortgage lending remained a bright spot, with household mortgage borrowing rising C$5.3 billion in Q4 2024, marking the strongest mortgage demand over the past 3 years and contributing to solid housing-credit growth entering 2025. Commercial lending trends were mixed: while demand remained steady, credit quality pressures began to emerge, with Fitch projecting that the average gross impaired-loans ratio could approach 1% in 2025, up from 0.82% in mid-2025. Together, these dynamics show a banking sector that remains profitable and well-capitalized, but one that is preparing for a more cautious credit environment.
What this means: Compared to 2024, 2025 is showing both strength and caution. On one hand, the surge in deposits and strong earnings growth signal that Canadian banks remain well-capitalized and profitable. On the other, rising provisions and impaired-loan risks suggest that credit risk is not disappearing. The banking system appears resilient for now, but its stability will likely hinge on how well banks manage credit losses and maintain funding in a more uncertain economic environment.
Below, we’ll break down the banking industry and help you choose some of the best bank stocks in Canada.
Related: List of stocks in the Canadian (TSX) financials sector
What are bank stocks?
Bank stocks are financial companies that store money for clients, sell financial products, and lend out money.
Banks can be national or local, online or in-store, retail or commercial. But notwithstanding their differences, most banks make money in the same way: they take money from depositors and pay them an interest rate, then lend the money to borrowers at a much higher rate.
Types of bank stocks
In general, banks can be broken down into three main categories:
- Commercial banks: These banks provide services to individuals and small- to medium-sized businesses. Commercial banks make most of their money from interest on loans and fees on services.
- Investment banks: For high-net worth individuals and large corporations, there are investment banks. Not only do these banks offer wealth management to high-profile consumers, they also help companies go public through IPOs.
- Universal banks: These are hybrid banks, or banks that offer both investment and commercial services.
Top Canadian banking stocks
Canada has some of the largest and safest bank stocks in the world. Below we’ll cover some of the top bank stocks on the Toronto Stock Exchange.
| Banking Stocks | Description |
| Royal Bank of Canada (TSX: RY) | The largest company in Canada by market cap and one of the largest banks |
| The Toronto-Dominion Bank (TSX: TD) | The largest bank in Canada with $2.09 trillion in total assets. |
| Bank of Nova Scotia (TSX: BNS) | Third-largest bank with over 25 million customers |
| Bank of Montreal (TSX: BMO) | The oldest bank in Canada and the fourth largest by market cap. |
| Canadian Imperial Bank of Commerce (TSX: CM) | Canada’s fifth largest bank with around 11 million customers |
1. Royal Bank of Canada
The Royal Bank of Canada (RBC) (TSX: RY) is the one of the largest banks in Canada. Not only does it serve 17 million customers in 37 countries, but it boasts trillions of dollars in assets. RBC stock price sits near a 5-year high of $211 with a dividend yield of 2.9%.
For over 160 years, RBC has been serving clients with banking services. And though it’s grown exceedingly large (now employing around 94,000 people), the company still manages to post single-digit revenue growth. It was one of the few banks that actually made money during the pandemic, not surprising considering RBC has thrived through every economic downturn that’s come its way.
RBC is also a Canadian dividend knight, having increased its dividend every year for the last 14 years.
2. The Toronto-Dominion Bank
The Toronto-Dominion Bank (TSX: TD) has officially surpassed the Royal Bank as the largest bank in Canada.
With roots stretching back to 1855, TD now serves 27.9 million customers worldwide, with 11 million of those residing in Canada. Of the top five banks, TD has been the most digitally innovative (winning “Best Consumer Digital Bank” in 2021) with over 8 million digital customers actively using its apps and services. The bank has recently acquired First Horizon, a large bank based in Tennessee, which will help it expand its already large U.S. presence.
Like RBC, TD performed exceedingly well through the recent pandemic. As of late 2025, it’s one of the highest paying dividend stocks in the banking industry at 3.6%.
3. Bank of Nova Scotia
Founded in 1832, the Bank of Nova Scotia (TSX: BNS) (or Scotiabank) is Canada’s most international bank, with its 25 million global clients in 50 countries exceeding its Canadian customer base (11 million).
The Bank of Nova Scotia provides personal banking, corporate banking and wealth-management services. According to data from July 31, 2025, its trailing twelve-month revenue stands at approximately CAD 31.83 billion, up ~9 % year-over-year.
4. Bank of Montreal
The oldest bank on this list (founded in 1817), the Bank of Montreal (TSX: BMO) is the fourth largest bank in Canada by market cap, as well as one of the top 10 banks in North America.
BMO has over 13 million clients across the world, with 8 million of those residing in Canada. Though BMO was hit hard during the pandemic, it has rebounded strongly with 2024 revenues of $29 billion. In recent quarter Q3, they reported strong results with adjusted EPS rising to $3.23, up 22% from Q3 2024, net income increasing 21% to $2.4 billion, and revenue climbing 10% year-over-year on broad-based growth across all business segments. The stock price sits near an all-time high at $172 in November of 2025 with a dividend yield of 3.78%.
5. Canadian Imperial Bank of Commerce (CIBC)
Canadian Imperial Bank of Commerce (TSX: CM) has occupied the fifth position in the ranking of Canada’s largest banks for some time. And not without reason: though CIBC has 14 million customers across 1,100 branches, this bank has not done a great job at expanding its global clientele. Most of its revenue comes from Canada, with a relatively large secondary stream coming from the U.S.
And yet CIBC is still a hefty bank. Its Q3 revenue for 2025 was CA$7.25 billion, an increase from $6.6 billion in the same quarter in 2024. The adjusted net income grew from $1.9 billion to $2.1 billion over the same period. CBIC stock price sites near a 5-year high at $63 with a dividend yield of 4.24%.
How do banks make money?
As an investor, you want to put your money in companies that will expand their revenue, grow profitability, and increase the value of their stocks. So, naturally, you may wonder if banks even make enough money to reward investors.
The truth is, banks make a lot of money. Though bank stocks are not growth stocks, a bank can expand its revenue by signing up more clients, merging with other banks, or providing additional services.
In general, banks make their money in two primary ways: commercial banking and investment banking.
With commercial banking, banks earn money by offering banking services to individuals, such as chequing and savings accounts, personal loans, mortgages, lines of credit, financial planning, and other financial amenities. In this way, commercial banks make the bulk of their money by borrowing it from individuals at a low rate and lending it out at a much higher rate.
Investment banking is a much bigger operation. Investment banks offer guidance and services to corporations, governments, and higher net worth individuals. Investment banks make money by charging fees for services such as initial public offerings, mergers and acquisitions, and wealth management.
Some banks focus on only one of these revenue streams, while others (called “universal banks”) offer a combination of the two. Most of Canada’s biggest banks are universal banks.
Are banking stocks right for you?
Although bank stocks have their risks – too many customers defaulting on loans, technological disruption from fintech, recessions – the best bank stocks in Canada have a strong history of generating profits and managing crises.
Additionally, many of Canada’s top banks have high dividend yields, with a long history of increasing payouts. For Canadian investors looking to pocket a little extra from their stocks, dividends can help you buy more shares or more cash.
If you already have stocks in other market sectors (mining, technology, energy), bank stocks could add much needed stability, as well as diversification through exposure to another sector.
If you’d like to capitalize on numerousbanks at once, you can invest in a bank-focused ETF. In Canada, some top bank ETFs include: