In Shakespeare's Macbeth, Banquo is a foil to Macbeth: another character that when compared with Macbeth, helps the audience to better understand our tragic hero.
In Act One, scene two, reports have been delivered to Duncan, the King of Scotland, of the valiant efforts of both men. When we finally meet Macbeth and Banquo, they are returning from battle and meet the Weird Sisters. They prophesy to Macbeth (who is transfixed by what they say).
Banquo comments on Macbeth's reaction, surprised that his friend seems fearful. We can infer that Banquo does not take the women's words seriously, as he jokes with Macbeth about the pleasant nature of a prediction that says he will be a king—never imagining that Macbeth would ever really be in that position. Banquo's response appears to be much like someone would react to having his fortune told at a carnival.
Banquo, after hearing the witches' predictions for Macbeth, asks—with mere curiosity—what the creatures have to tell him, reminding them that he is not begging to know what they have to say and is not afraid that they might curse him: basically telling them that he doesn't believe that they have any real power. (This shows that he is immune to whatever they will share with him, unlike Macbeth.)
...My noble partner
You greet with present grace and great prediction
Of noble having and of royal hope…To me you speak not.
If you can look into the seeds of time,
And say which grain will grow and which will not,
Speak then to me, who neither beg nor fear
Your favors nor your hate. (I.iii.58-64)
The witches, of course, provide Banquo with a prophecy: though lesser than Macbeth, he is greater and happier (paradoxes). And then they tell Banquo that he will father a line of kings. Whereas they prophesy to lure Macbeth to his doom, we can infer they know that Banquo is a good man who cannot be "turned," and the witches tell him the simple truth.
When Ross arrives and proves the witches' prediction regarding Macbeth's new title of Thane of Cawdor is accurate, Banquo is amazed that anything true can come of evil, a statement that defines for the audience the kind of man Banquo is.
What, can the devil speak true? (113)
Banquo also shows the audience that he is wise—the witches cannot be trusted:
… But ’tis strange;
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— (132-136)
In scene four, we hear Banquo's words to Duncan as the King praises Banquo and Macbeth. For Banquo, his King, his country and his honor are most important, and he tells the King that whatever he has or does is what he owes Duncan.
Our final impression of the kind of man Banquo is, comes to us in Act Two, scene one. Here Macbeth approaches his friend to ask Banquo if he will support Macbeth "when the time comes." Banquo's response is that he will, but only if it does not compromise his ethics.
So I lose none
In seeking to augment it, but still keep
My bosom franchised and allegiance clear,
I shall be counsell'd. (33-36)
It is here that Banquo seals his doom. For he is the only one who has heard the witches' predictions for Macbeth, and he has now told Macbeth that he is a man of conscience who will not be swayed from what he believes to be right. Macbeth will not allow his friend to live and spoil Macbeth's chances to be King.