As the play begins, Macbeth and Banquo are friends and comrades in arms, both Scottish noblemen and valiant defenders of King Duncan. The first description of them concerns how fiercely they had recently fought together to defeat the forces of the King of Norway and Macdonwald, a traitor to the King.
Macbeth and Banquo together encounter the witches on the heath where Macbeth hears their prophecy for the first time. Banquo reacts as a friend would at the sound of Macbeth's good fortune, then seeks to know his own future. Shortly after, Banquo warns Macbeth of danger, explaining that the witches may not be trustworthy:
And oftentimes, to win us to our harm,
The instruments of darkness tell us truths,
Win us with honest trifles, to betray's
In deepest consequence.
By the end of Act I, Banquo still relates to Macbeth as his friend. Banquo has noticed a strangeness in Macbeth's behavior, but assumes it is merely a reaction to the new honor (Thane of Cawdor) he has suddenly received.
Macbeth and Banquo maintain their friendship into Act II, when Banquo mentions the witches. Macbeth lies, saying he never thinks of them, but tells Banquo that he would like to discuss them further. Macbeth then seeks to draw Banquo closer to him, inviting him to join Macbeth's cause when the time comes for him to become king. Banquo makes his position clear:
So I lose none
In seeking to augment it, but still keep
My bosom franchised and allegiance clear,
I shall be counseled.
With these words, Banquo sets limits on his loyalty to Macbeth. He will support Macbeth so long as he can do so with a clear conscience and an unguilty heart. Thus, Banquo's allegiance has been made conditional, a fact not lost on Macbeth.
After Duncan's murder and Macbeth's taking the throne, Banquo's suspicions are fully raised:
Thou hast it now: King, Cawdor, Glamis, all,
As the weird women promised, and I fear
Thou play'dst most foully for 't.
Banquo trusts Macbeth no more and dies shortly thereafter at Macbeth's command.