Canadian Banks Ranking – Which One Of The Strongest Bank?

All that put together, BMO remains a good pick and a great bank, but I cannot select it as a winner. BMO is therefore closing my bottom three.

3. TD Bank (TD/TD.TO)

Moving on to the top three of my list. So far, I don’t own any of those banks. I don’t own my number three either. TD Bank has an approach similar to CIBC in terms of classic savings and loans, but they did it in a very nice way. It operates three business segments: Canadian retail banking, U.S. retail banking, and wholesale banking. When I reviewed its latest earnings report, I noticed how it remains a strong bank.


  • Revenues (a third) coming from the US: They really caught up that game from their southern neighbors; they know how they want to deal; they have a great exposure over there.
  • Largest amount of assets in Canada.
  • Doing things simple but doing them the right way: They have been doing very well for the past 10 years.
  • Strong wealth management: Their segment from Ameritrade did very well, and now they’re selling to Charles Schwab.


  • High exposure to mortgages: Hot markets such as Vancouver and Toronto could cool down a lot at one point in time. If we get into a housing bubble, then it’s going to be harder for TD.

Everything is running smoothly for TD. I’m not worried about them. But is it the best we can get from Canadian Banks? Getting close, but not quite there yet.

2. Royal Bank – RBC (RY/RY.TO)

Now my top two favorites! I own both of them. Sometimes number two becomes number one and vice versa, but right now my second favorite is Royal Bank. RY has a strong position in the personal and commercial banking sector (46% of its revenue). I was happy when I reviewed their latest quarter report.


  • Battling with TD to be the largest bank in terms of assets: They’re well established across all of Canada.
  • Rouhly 50% of their revenue are coming from classic banking activities: Which means only 50% is subject to the interest rate squeeze.
  • The other half is about wealth management, capital market, and insurance: They have been able to do lots of cross-selling across those segments, they are maximizing their presence in the wealth management, and they had a huge deal with BlackRock for ETFs.
  • Outperformed the average bank in Canada in terms of market: Recently, they have also shown their strenght in terms of earnings.
  • Strong dividend growth policy in place: Don’t expect any dividend increase for the rest of 2020 from any banks. I’m pretty sure Royal Bank (and other Canadian banks too) will wait a little, see how things go, see how their loan book is being affected, and then they may resume in 2021 or 2022. Still, the dividend is safe.


  • Royal Bank could also get hurt by a bearish housing market: This is a rather small downside considering RY’s strenght and ability to face headwinds.

Honestly, there’s not much to dislike about Royal Bank. It could be your number one and would hardly disagree.

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