{"id":2678,"count":8731,"description":"<h2>What are bank stocks?<\/h2>\r\nBank stocks represent partial ownership in a financial institution that\u2019s 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.\r\n<h2><b>How do you choose a good bank stock?\u00a0<\/b><\/h2>\r\n<h3><b>1. Look at the bank\u2019s profitability<\/b><\/h3>\r\n<span style=\"font-weight: 400\">First, you want to be sure the bank is even profitable. To do that, you can use the following metrics.\u00a0<\/span>\r\n<ul>\r\n \t<li style=\"font-weight: 400\"><b>Return on equity (ROE):<\/b><span style=\"font-weight: 400\"> this metric tells you how much profit a bank makes from its shareholder\u2019s equity. The higher this metric, the more efficient a bank is using its stakeholder\u2019s money.\u00a0<\/span><\/li>\r\n \t<li><b>Return on assets (ROA): <\/b><span style=\"font-weight: 400\">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.\u00a0<\/span><\/li>\r\n \t<li style=\"font-weight: 400\"><b>Efficiency ratio:<\/b><span style=\"font-weight: 400\"> 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.\u00a0<\/span><\/li>\r\n<\/ul>\r\n<h3><b>2. Assess the bank\u2019s risks\u00a0<\/b><\/h3>\r\n<span style=\"font-weight: 400\">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.<\/span>\r\n<ul>\r\n \t<li style=\"font-weight: 400\"><b>Nonperforming loans ratio (NPL):<\/b><span style=\"font-weight: 400\"> 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.\u00a0<\/span><\/li>\r\n \t<li><b>Net charge-offs: <\/b><span style=\"font-weight: 400\">a net charge-off is a bank\u2019s declaration stating that a loan hasn\u2019t been paid and is unlikely to be paid. As with NPLs, the less net charge-offs a bank has, the less money it\u2019s losing on outstanding loans.\u00a0<\/span><\/li>\r\n<\/ul>\r\n<h3><b>3.\u00a0 Check back here for our top picks\u00a0<\/b><\/h3>\r\n<span style=\"font-weight: 400\">Finally, we\u2019ll keep this page updated with our staff writer\u2019s reviews and assessment of Canada\u2019s bank stocks. Our writers often use these metrics to help investors see which bank stocks are doing well and which are doing poorly.\u00a0<\/span>\r\n<ul>\r\n \t<li>Related: A list of <a href=\"https:\/\/www.fool.ca\/investing\/tsx-financials-sector\/\">stocks in Canada's financial sector<\/a>, which includes bank stocks<\/li>\r\n<\/ul>\r\n<span data-sheets-value=\"{\" data-sheets-userformat=\"{\">[KevelPitch adtype=151]<\/span>\r\n\r\nCheck back here for the most up to date information about bank stocks in Canada.","link":"https:\/\/www.fool.ca\/category\/investing\/bank-stocks\/","name":"Bank Stocks","slug":"bank-stocks","taxonomy":"category","parent":1,"meta":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bank Stocks News | The Motley Fool Canada<\/title>\n<meta name=\"description\" content=\"Keep up with the latest news on bank stocks with The Motley Fool&#039;s latest 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