#1Scotiabank Investor Presentation Fourth Quarter, 2010 December 3, 2010 Caution Regarding Forward-Looking Statements Forward-looking statements Our public communications often include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may include comments with respect to the Bank's objectives, strategies to achieve those objectives, expected financial results (including those in the area of risk management), and the outlook for the Bank's businesses and for the Canadian, United States and global economies. Such statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intent," "estimate," "plan," "may increase," "may fluctuate," and similar expressions of future or conditional verbs, such as "will," "should," "would" and "could." By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. Do not unduly rely on forward-looking statements, as a number of important factors, many of which are beyond our control, could cause actual results to differ materially from the estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: the economic and financial conditions in Canada and globally; fluctuations in interest rates and currency values; liquidity; significant market volatility and interruptions; the failure of third parties to comply with their obligations to us and our affiliates; the effect of changes in monetary policy; legislative and regulatory developments in Canada and elsewhere, including changes in tax laws; the effect of changes to our credit ratings; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions and liquidity regulatory guidance; operational and reputational risks; the risk that the Bank's risk management models may not take into account all relevant factors; the accuracy and completeness of information the Bank receives on customers and counterparties; the timely development and introduction of new products and services in receptive markets; the Bank's ability to expand existing distribution channels and to develop and realize revenues from new distribution channels; the Bank's ability to complete and integrate acquisitions and its other growth strategies; changes in accounting policies and methods the Bank uses to report its financial condition and the results of its operations, including uncertainties associated with critical accounting assumptions and estimates; the effect of applying future accounting changes; global capital markets activity; the Bank's ability to attract and retain key executives; reliance on third parties to provide components of the Bank's business infrastructure; unexpected changes in consumer spending and saving habits; technological developments; fraud by internal or external parties, including the use of new technologies in unprecedented ways to defraud the Bank or its customers; consolidation in the Canadian financial services sector; competition, both from new entrants and established competitors; judicial and regulatory proceedings; acts of God, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments, including terrorist acts and war on terrorism; the effects of disease or illness on local, national or international economies; disruptions to public infrastructure, including transportation, communication, power and water; and the Bank's anticipation of and success in managing the risks implied by the foregoing. A substantial amount of the Bank's business involves making loans or otherwise committing resources to specific companies, industries or countries. Unforeseen events affecting such borrowers, industries or countries could have a material adverse effect on the Bank's financial results, businesses, financial condition or liquidity. These and other factors may cause the Bank's actual performance to differ materially from that contemplated by forward-looking statements. For more information, see the discussion starting on page 62 of the Bank's 2010 Annual Report. The preceding list of important factors is not exhaustive. When relying on forward-looking statements to make decisions with respect to the Bank and its securities, investors and others should carefully consider the preceding factors, other uncertainties and potential events. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf. The "Outlook" sections in this document are based on the Bank's views and the actual outcome is uncertain. Readers should consider the above-noted factors when reviewing these sections. Additional information relating to the Bank, including the Bank's Annual Information Form, can be located on the SEDAR website at www.sedar.com and on the EDGAR section of the SEC's website at www.sec.gov. Scotiabank 2#2Scotiabank Overview Rick Waugh President & Chief Executive Officer 2010 Overview • Record earnings ➤ Net income: $4,239 million ➤EPS: $3.91, up 18% vs. prior year ➤ ROE: 18.3% Record revenue and net income with all platforms contributing to success Record net income in Canadian Banking Continued strength in risk management Strong capital ratios Scotiabank 4#3Exceeded 2010 Targets Objective ROE Target Actual 16% to 20% 18.3% EPS Growth 7% to 12% 18% Productivity Ratio < 58% 51.8% Capital ratios Strong Capital Ratios Tier 1: 11.8% TCE: 9.6% Scotiabank Scotiabank Financial Review Luc Vanneste Executive Vice-President & Chief Financial Officer 5#4Strong Quarter Q4/10 Q3/10 Q/Q Q4/09 Y/Y 1,092 1,062 3% Net Income ($MM) 902 21% $1.00 $0.98 2% EPS $0.83 20% 17.9% 18.2% (30) bps ROE 16.4% 150 bps 54.4% 52.5% (190) bps Productivity Ratio 54.2% (20) bps Year-over-year comparison Q4 earnings benefited from... Partly offset by... • Asset growth and record net interest income • Lower PCLS • Increase in mutual fund revenues Scotiabank • Growth in operating expenses ⚫Lower trading revenues Higher tax provisions Consistent Growth in Revenues 3,808 Revenues (TEB) ($ millions) 4,012 3,854 1,636 1,611 1,699 2,172 2,243 2,313 Q4/09 Q3/10 Q4/10 Other Income Net Interest Income (TEB) Scotiabank Year-over-Year ■ Net interest income up 6% + Higher asset levels ■ Other income up 4% + Higher mutual fund revenues + Higher securitization revenues + Higher net gains on securities - Lower trading revenues Quarter-over-Quarter ■ Net interest income up 3% + Improved margin ■ Other income up 5% + Higher contribution from R-G Premier + Stronger securitization and trading revenues - Lower net gains on securities 7 8#5Higher Expenses: Growth Initiatives & Seasonality Non-Interest Expenses ($ millions) 2,183 2,064 2,023 Year-over-Year Expenses up 6% - Higher salaries and employee benefits - Higher technology and advertising spending to support business growth 1,097 1,191 1,126 394 411 384 " 573 513 581 Q4/09 Q3/10 Q4/10 Salaries & employee benefits ■Premises & technology Other Scotiabank Quarter-over-Quarter Expenses up 8% Higher performance and stock based compensation - Seasonally higher advertising, technology and professional fees Strengthened Capital Ratios 11.7 11.8 11.2 11.2 10.7 9.6 9.3 8.8 8.8 8.2 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 TCE (%) Tier 1 (%) 2010 Summary: • Internal capital generation of $2,015MM (vs. $1,371MM in 2009) Stock issued under DRIP: $619MM (vs. $511MM in 2009) Scotiabank 9 10#6Canadian Banking: Strong Quarter, Record Year 503 Net Income ($ millions) 604 Q4/09 Q3/10 567 Q4/10 Year-over-Year ■ Revenues up 5% + Asset growth + Deposit growth + Growth in Other Income ■ PCLs down $16MM Expenses up 4% - - Higher performance based compensation - Expenses related to growth initiatives Quarter-over-Quarter ■ Revenues flat PCLs up $11MM Expenses up 4% Seasonally higher expenses - Higher performance based compensation Scotiabank International Banking: Strong Quarter Net Income ($ millions) 317 283 363 Year-over-Year ■ Revenues up 14% (up 15% ex. FX) + Increased contribution from acquisitions + Higher volumes ■ PCLs down $39MM Expenses up 7% - Impact of acquisitions - Higher compensation costs and premises expenses Q4/09 Q3/10 O Q4/10 Scotiabank Quarter-over-Quarter ■ Revenues up 3% (up 2% ex. FX) + Benefit of acquisitions + Higher volumes ■ PCLs down $10MM Expenses up 5% Higher salaries - Higher advertising and other seasonal costs 11 12#7Scotia Capital: Second Best Year on Record Year-over-Year ■ Revenues down 20% Net Income ($ millions) 353 305 273 Q4/09 Q3/10 Q4/10 Scotiabank Other Segment (1) ($ millions) - Lower trading revenue - Lower underwriting and credit fees - Lower loan volumes PCLs down $71MM Expenses up 13% Higher expense from growth initiatives Quarter-over-Quarter ■ Revenues up 4% + Higher trading revenues + Higher M&A advisory revenues ■ PCLS recoveries down $17MM Expenses up 21% Higher expenses from growth initiatives and legal provisions Q4/10 Funding Net Interest Income (98) Q3/10 (117) Q4/09 (106) Broker Deposits (2) -- (49) Net Securitization Revenues (3) (38) (110) (139) AFS Securities Writedowns (15) (49) Financial Instruments 25 (6) 28 General Provision 40 -- Expenses & Net Other Items (23) 20 27 TEB Offset (70) (70) (73) Taxes 68 124 124 Total Other (111) (164) (237) (1) Includes Group Treasury and other corporate items, which are not allocated to a business line (2) Effective Q1/10, Broker deposits were transferred to Canadian Banking 13 (3) Represents the impact to the Other segment of CMB securitization revenues recognized in other income, and the reduction in mortgage net interest income earned as a result of removing the mortgages from the Balance Sheet Scotiabank 14#8Scotiabank Risk Review Rob Pitfield Group Head and Chief Risk Officer Q4 2010 Risk Overview Risk in credit portfolios continues to be well managed ➤ Significant decline in specific provisions year-over-year Reduced general allowance by $40 million Continued downward trend in net impaired loan formations Overall credit quality of loan portfolios continues to improve Market risk well controlled ➤ Lower variability in trading revenues compared to Q3/10 Lower VaR with fewer loss days Scotiabank 16#9Significant Decline in Specific Provisions Year-over-Year ($ millions) Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Canadian Retail 159 140 149 145 140 Canadian Commercial 33 41 40 24 34 192 181 189 169 174 International Retail 122 130 125 118 129 International Commercial 45 47 48 20 20 (1) 167 177 173 138 128 Scotia Capital Total PCL ratio (bps) 65 14 (5) (7) (8) 424 372 357 300 294 63 63 55 55 55 55 43 43 41 Scotiabank Continued Downward Trend in Net Impaired Loan Formations 17 ($ millions) Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Canadian Retail 205 184 154 147 135 Canadian Commercial 24 42 15 47 71 229 226 169 194 206 International Retail 254 259 184 211 149 International Commercial 5 135 15 (12) (36) 259 394 199 199 113 Scotia Capital 139 (109) (68) (10) 13 Total 627 511 300 383 332 Scotiabank 18#10Risk Outlook • Asset quality remains strong • ➤ Retail and Commercial portfolios performing as expected ➤ Continued strength in corporate portfolios Expect 2011 provisions to remain in line with 2010 ➤ Modest decline in Canadian retail provisions International retail provisions in line with current levels ➤ Lower new provisions in corporate and commercial portfolios, with less recoveries than 2010 Scotiabank Scotiabank Canadian Banking 2011 Outlook Anatol von Hahn Group Head, Canadian Banking 19#11Canadian Banking: 2011 Outlook • Focus on growing deposits, payments and wealth management Subdued economic recovery and slower retail asset growth in a competitive environment • Retail PCLs expected to decrease. Commercial PCLs performing as expected • Continue to invest in and grow our core businesses Scotiabank Scotiabank Global Wealth Management 2011 Outlook Chris Hodgson Group Head, Global Wealth Management 21#12Global Wealth Management: 2011 Outlook • • • Driving diversified organic revenue growth across all business lines ➤ Canadian Wealth Management International Wealth Management Insurance ➤ Global Transaction Banking Optimize DundeeWealth opportunity and explore further strategic acquisitions globally Capitalize on our people, international reach, and expertise to accelerate growth Scotiabank Scotiabank International Banking 2011 Outlook Brian Porter Group Head, International Banking 23#13International Banking: 2011 Outlook Renewed asset and revenue growth as economies rebound Stronger growth in Latin and Asian markets, gradual improvement in other regions Stable margins - increasing retail asset growth, improving product mix and sales productivity Stable PCLs, with positive trend in overall portfolio Measured investments for growth, along with prudent expense management Selective acquisitions, especially in high growth areas Scotiabank Scotiabank Scotia Capital 2011 Outlook Steve McDonald Group Head, Global Corporate & Investment Banking & Co-CEO, Scotia Capital 25#14Scotia Capital: 2011 Outlook Trading revenues likely to be more in line with recent quarters ➤ Should benefit from growth initiatives in niche products, target industries and select geographies Modest signs of M&A activity should accelerate and drive asset growth PCLs should remain below historical levels Executing Global Wholesale Banking initiative to drive growth Scotiabank Scotiabank 2011 Outlook Rick Waugh President & Chief Executive Officer 27#152011 Outlook • • Continue to take advantage of a unique window of opportunity Focused on achieving sustainable revenue growth supported by strong contributions from all business lines Moderate asset growth and a wider margin • Non-interest expenses will be driven mainly by acquisitions and volume-related growth Scotiabank 2011: Targets Remain Unchanged Metric Target EPS Growth 7-12% ROE 16-20% Productivity Ratio <58% Capital Maintain strong ratios Scotiabank 29 30#16Scotiabank Net Interest Margin (%) Appendix 1.74 1.76 1.75 1.73 1.68 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q4 margin benefited from... • Mark-to-market gains • Lower volume of low margin assets Partially offset by... Lower spreads in Scotia Capital Scotiabank 32#17Canadian Banking: Strong Y/Y Performance in Wealth Management 1,886 Revenues (TEB) ($ millions) 1,971 Year-over-Year ■ Retail & Small Business 1,974 + Asset growth 1,192 1,221 1,199 409 399 365 322 370 354 Q4/09 Q3/10 Retail & Small Business Commercial Banking Wealth Management Scotiabank Q4/10 + Higher net interest income ■ Commercial Banking + Lower PCLS + Higher fee based revenues and securities gains ■ Wealth Management + Significant asset growth + Increased contributions from CI & DW Quarter-over-Quarter + Asset and deposit growth Non-recurring positive items in Q3 Canadian Banking: Volume Growth Average Balances ($ billions) Q4/10 Q3/10 Q4/09 Y/Y Q/Q Residential Mortgages (1) 134.2 130.9 122.9 11.3 3.3 Personal Loans 39.0 38.5 36.9 2.1 0.5 Credit Cards (2) 9.0 9.1 9.3 (0.3) (0.1) Business Loans & 24.7 24.7 23.6 1.1 0 Acceptances Personal Deposits (3) 106.9 105.6 93.5 13.4 1.3 Non-Personal Deposits 58.9 58.5 54.1 4.8 0.4 Wealth Mgmt. AUA (Spot) 156.5 147.6 136.8 19.7 8.9 (1) Before securitization (2) Includes ScotiaLine VISA (3) Effective November 1, 2009, $10 billion of broker sourced deposits were transferred from the Other segment into Canadian Banking. Scotiabank 33 34#18Canadian Banking: Market Share Market Share (%) 1 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Residential Mortgages 20.14 20.23 20.28 20.40 20.53 Total Personal Lending 18.30 18.29 18.26 18.27 18.27 Total Personal Deposits 10.89 10.84 10.89 10.83 10.81 Small Business Lending² 14.55 15.70 15.57 14.87 15.84 Mutual Funds 8.35 8.84 9.10 9.18 9.23 (1) Market share statistics are issued on a one-month lag basis. (Q4/10: September 2010) (2) Small Business statistics are on a four-months lag basis (Q4/10: June 2010) Total Personal Lending market share is based on a comparison of the big six banks. Total Personal Deposits market share is based on a comparison of the total industry. Mutual Funds market share is based on a comparison with total banks. Sources: Mutual Funds - IFIC; Personal Lending and Personal Deposits - Bank of Canada Scotiabank International Banking: Improving Environment Revenues (TEB) ($ millions) 1,384 1,424 1,252 292 311 298 548 509 424 530 564 584 Q4/09 Q3/10 Mexico Q4/10 Caribbean & Central America Latin America & Asia Scotiabank Year-over-Year Mexico + Retail volumes and spreads FX trading revenues ■ Caribbean & Central America + Impact of R-G Premier acquisition ■ Latin America & Asia + Growth in volumes + Increased contribution from T-Bank Quarter-over-Quarter ■ Mexico Lower net gains on securities ■ Caribbean & Central America + Impact of R-G Premier acquisition ■ Latin America & Asia + Contributions from T-Bank and Bank of Xi'an 35 36#19Scotia Capital: Strong Trading Revenues 910 Revenues (TEB) ($ millions) 724 697 443 385 387 467 310 339 Q4/09 Q3/10 Q4/10 Year-over-Year ■ Global Capital Markets - Lower fixed income and institutional equity revenues + Precious metals revenues ■ Global Corporate & Investment Banking Significantly lower loan volumes Quarter-over-Quarter ■ Global Capital Markets - Lower institutional equity revenues + Higher energy revenues ■ Global Corporate & Investment Banking + Higher M&A revenue - Loan volume declines in all geographies Global Capital Markets Global Corporate & Investment Banking Scotiabank Economic Outlook in Key Markets Real GDP (Annual % Change) 2000-08 Avg. 2009 2010F 2011F Mexico 2.8 (6.5) 4.8 3.5 Peru 5.6 0.9 7.0 5.4 Chile 4.3 (1.5) 4.8 5.8 Jamaica 1.4 (3.0) (0.5) 1.5 Trinidad & Tobago 7.5 (3.5) 2.0 2.5 Costa Rica 4.5 (1.3) 3.5 3.0 Dominican Republic 5.4 3.5 4.5 4.0 Thailand 4.6 (2.3) 6.5 4.5 2000-08 Avg. 2009 2010F 2011F Canada 2.6 (2.5) 3.0 2.3 U.S. 2.3 (2.6) 2.7 2.1 Source: Scotia Economics, as of November 4, 2010 Scotiabank 37 38#20Unrealized Securities Gains ($ millions) Q4/10 Q3/10 Q4/09 Emerging Market Debt 378 330 461 Other Debt 765 602 512 Equities 274 176 40 1,417 1,108 1,013 Net Fair Value of Derivative Instruments (228) (193) (185) and Other Hedge Amounts Total 1,189 915 828 Scotiabank Trend in PCL Ratios (Specific PCL as % average of loans & BAs) Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Canadian Banking Retail Commercial Total 0.37 0.32 0.35 0.32 0.30 0.55 0.68 0.68 0.38 0.55 0.40 0.37 0.39 0.33 0.33 International Banking Retail 2.30 2.41 2.42 1.88 2.00 Commercial 0.48 0.50 0.53 0.20 (0.01) Total 1.13 1.19 1.22 0.85 0.77 Scotia Capital Corporate Banking 0.65 0.15 (0.07) (0.09) (0.11) All Bank 0.63 0.55 0.55 0.43 0.41 Scotiabank 39 40#21Trend in Specific Provisions ($ millions) 500 400 300 200 100 0 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Scotiabank Specific PCLS - Specific PCLs as a % of Avg. Loans & BAs Trend in Net Impaired Loan Formations ($ millions) 1,200 1,000 800 600 400 200 0 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Scotiabank 41 42#22Trend in Gross Impaired Loans ($ millions) 6,000 5,000 4,000 2.00% 1.50% 1.00% 0.50% 0.00% Total Allowance as a % of Loans & BAS 0.95% 1.03% Total Allowance as a % of GIL - ex. R-G Premier Bank acquisition 63% 73% 72% (1) Earnings coverage of PCL 6.9x 4.0x Strong Coverage Ratios Q4/10 Q4/09 * Decline in R-G Premier Bank's GILs in Q4/10 reflects preliminary purchase price allocation that reduced carrying value to its estimated fair value. Scotiabank 43 1,000 2,000 3,000 Q4/07 Q1/08 GILS ex. R-G IIIII R-G Premier Bank -- GILS as a % of Loans & BAs ex. R-G Q2/08 Q3/08 Q4/08 Q1/09 02/09 Q3/09 -GILS as a % of Loans & BAs Q4/09 Q1/10 Q2/10 Q3/10 Q4/10* (1) Pre-tax, pre-provision income to total PCL Scotiabank 44#23Canadian Retail: Loans and Provisions (balances at Q4/10, $ billions) 135 Total = $181B; 92% secured 24 13 9 Mortgages(1) % secured PCL 100% Lines of Credit 69% Personal Loans Credit Cards(2) 97% 37% Q4/10 Q3/10 Q4/10 Q3/10 Q4/10 Q3/10 Q4/10 Q3/10 $ millions 3 1 40 29 55 69 41 46 % of avg. 1 <1 67 49 174 224 180 201 loans (bps) (1) Before securitizations of $16 billion & mortgages converted to MBS of $18 billion; 52% insured (including $15 billion portfolio insurance); LTV in mid-50s for uninsured portfolio Scotiabank (2) Includes $6 billion of Scotialine VISA 45 International Retail: Loans and Provisions (balances at Q4/10, $ billions) 12.9 Total Portfolio = $25B 77% secured 2.9 Personal Loans ($7.0 B) Credit Cards ($ 1.8 B) ■Mortgages ($16.5 B) 0.8 5.1 9.2 11 4.7 <+0.4 2.6 3.6 16 3.0 <0.1 14 +0.5 0.7 C&CA % of total 51% Mexico 20% Chile Peru 18% 10% PCL Q4/10 Q3/10 Q4/10 Q3/10 Q4/10 Q3/10 Q4/10 Q3/10 $ millions 41 24 45 47 17 17 26 31 % of avg. 125 83 350 376 150 153 389 500 loans (bps) Scotiabank 46#24International Commercial: Lending Portfolio Q4/10 = $37 billion Peru 15% Well secured Other 7% Mexico 10% Chile 15% Asia/Pacific -(10 countries) 26% Caribbean & Central America 27% • Portfolios in Asia/Pacific, Mexico, Chile, Peru and Central America performing well Scotiabank Q4 2010 Trading Results Within One-Day VaR 22 40 30 20 10 0 (10) (20) Scotiabank -Actual P&L 1-Day VaR Average 1-Day VaR Q4/10: $9.3MM Q3/10: $12.7MM 47 48#25Q4 2010 Trading Revenue Distribution 10 (# days) 8 60 4 2 ال 0 (4) (3) (2) (1) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 ($ millions) Scotiabank ■ 91% of days had positive results in Q4/10 49