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Let’s rank the Big 6 Canadian banks from worst to best!

Whether you already hold one of these financial giants or are considering adding a bank to your portfolio, this will help you understand key strengths, weaknesses, and long-term investment potential.

Here’s the good, the bad, and the boring.

Running Length: 00:30:58

Scotiabank (BNS)

• Bear Case: Volatility from international exposure, no dividend increase in 2024 (effectively a passive cut), and the highest payout ratio among peers. Dead last on most key metrics.
• Mike’s Take: Better long-term opportunities exist. Unless you see a major turnaround, capital might be better placed elsewhere.

CIBC (CM)

• Bull Case: Strong performance in 2024, solid focus on domestic retail and commercial banking.
• Bear Case: Limited growth potential, heavy exposure to the Canadian economy, and high concentration of uninsured mortgages.
• Mike’s Take: Not a bad bank, just others with stronger positioning.

TD Bank (TD)

• Bull Case: Large U.S. exposure, strong capital position, potential growth from asset recycling.
• Bear Case: Impact of the money laundering investigation, capped U.S. growth, and some uncertainty around regulatory resolution.
• Mike’s Take: A deluxe bond with decent yield and modest growth. Good, but overshadowed by stronger peers.

Bank of Montreal (BMO)

• Bull Case: Aggressive business model, strong U.S. presence, pioneer in private wealth services.
• Bear Case: Higher volatility and integration risks from acquiring the Bank of the West.
• Mike’s Take: Upgraded due to TD’s issues. Great option with upside potential.

National Bank (NA)

• Bull Case: Top long-term performer with strong growth strategy, smart acquisitions (e.g., Canadian Western Bank), solid wealth, and capital markets business.
• Bear Case: Still the smallest of the big six, concentrated exposure in Quebec, more vulnerable in a localized recession.
• Mike’s Take: Still a top personal holding. Temporarily behind RBC due to macro uncertainty.

Royal Bank (RY)

• Bull Case: Huge diversification, balanced revenue mix (banking, wealth, insurance), robust dividend triangle, steady performance.
• Bear Case: Large mortgage loan book, highly exposed to the Canadian economy.
• Mike’s Take: Best all-around performer right now. Strong foundation with size, scale, and stability.

Final Thoughts

• Don’t collect all six banks like Pokémon.
• Instead, choose your favorite two based on business model and metrics.
• Diversify across the financial sector: Consider EQ Bank, GoEasy, Propel Holdings, TMX Group, Brookfield, Intact Financial, and life insurers like Manulife, Sun Life, and Great-West Life.

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