With interest rates on the decline, some TSX sectors are getting ready to shine in 2025 — and banking and retail could be at the top of the list. Lower borrowing costs mean banks could see a surge in loan activity and better credit quality, while retailers are likely to benefit as consumers feel more confident and spend more. For long-term investors, this market environment could be a great opportunity to focus on high-quality stocks within these two sectors.

In this article, I'll dive into one top TSX stock from the banking sector and one from the retail sector, showing you why they could be big winners in 2025.

Bank of Nova Scotia stock

From the banking sector, Bank of Nova Scotia (TSX:BNS), or Scotiabank, is my top choice for long-term investors in 2025. After rallying by 21.3% over the last year, BNS stock trades at $76.93 per share and offers a 5.5% annualized dividend yield. With a market cap of $95.8 billion, it's currently the fourth-largest Canadian bank.

In its fiscal year 2024 (ended in October), Scotiabank posted a 4.2% YoY (year-over-year) increase in its total revenue to $33.7 billion as it achieved notable gains in net income, climbing to $7.9 billion from $7.5 billion the previous fiscal year. Its adjusted net income for the year, which excludes certain one-time charges, was even higher at $8.63 billion, reflecting a 3.2% YoY rise.

Scotiabank's Canadian banking segment saw adjusted yearly earnings rise by 7% YoY with the help of double-digit growth in net interest income and careful expense control. Meanwhile, its international banking operations delivered an impressive 11% YoY adjusted earnings growth, propelled by margin expansion and productivity initiatives in key markets like Mexico, Peru, and Chile.

Going forward, falling interest rates could act as a major tailwind for Scotiabank, boosting loan volumes across its Canadian and international markets. In addition, the Canadian lending giant's continued focus on digital transformation and operational efficiency could further boost its profitability and competitive edge, making it a top TSX stock to consider from the banking sector.

Dollarama stock

From the retail sector, Dollarama (TSX:DOL) could arguably be one of the safest bets in 2025. This is because this Toronto-based company operates in the value retail space, which tends to perform well in both strong and uncertain economic conditions.

After rallying by 47.4% in the last year, DOL stock currently trades at $139.02 per share with a market cap of $38.7 billion. While its annualized dividend yield is currently less than 1%, it still maintains a strong track record of raising dividends each year.

In the quarter ended in October 2024, Dollarama posted a 5.7% YoY increase in its sales to $1.6 billion as its comparable store sales rose 3.3%. Its adjusted quarterly earnings also climbed by 6.5% YoY to $0.98 per share.

In its latest earnings report, the Canadian value retailer highlighted cautious consumer spending but reaffirmed the resilience of its business model, driven by steady demand for consumables and value-priced goods. As the consumer spending environment improves with declining interest rates, Dollarama could benefit from even higher demand for its products.