#1Scotiabank Investor Presentation First Quarter, 2009 March 3, 2009 Scotiabank 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 fect f changes in monetary policy; legislative d regulatory developments in Canada and elsewhere, including changes in tax laws; the effect of changes to our credit ratings; 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 à 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 2008 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. 2#2Scotiabank Overview Rick Waugh President & Chief Executive Officer 3 Scotiabank Solid Performance in a Challenging Environment ■ Challenging environment - ongoing volatility in global financial markets - major economies in deepening recession ■ Solid performance + good core growth across all businesses + contribution from acquisitions + excellent capital markets performance despite securities write-downs + higher capital ratios + dividend maintained - higher PCLs, funding and capital costs 4#3Scotiabank net income ($ millions) Strong Core Earnings in Three Main Businesses 466 438 373 289 227 388 300 191 Q1/08 Q4/08 Q1/09 44 Other* Canadian International Scotia Capital (18) Year over year Canadian Banking: Strong deposit & asset growth, higher PCLS International: Solid growth, positive impact of acquisitions & FX, higher PCLS (284) (422) Scotia Capital: Record revenues in some capital market businesses, low loan losses Other: Increased funding costs, securities write-downs * includes Group Treasury and other corporate items, which are not allocated to a business line Scotiabank 5 Higher Capital Ratios Capital ratios (%) 11.4 11.1 Total 10.2 9.0 9.3 9.5 Tier 1 TCE 7.8 7.2 7.3 ■ Raised $2.5 billion of capital in Q1 ■ Further capacity to raise innovative capital ■ Lower risk-weighted assets O High quality of capital Q1/08 Q4/08 Q1/09 6#4Scotiabank Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 7 Solid Quarter Scotiabank Q1/09 Reported Qtr/Qtr Yr/Yr Net income ($MM) $842 100%+ 1% EPS $0.80 100%+ (2)% ROE 16.9% 1090 bp (140) bp 58.7% Productivity ratio Quarter over quarter + Significantly lower write-downs in Q1 + Higher investment banking fees + Increased trading revenues + Positive impact of forex - Higher performance based comp. (1650) bp 220 bp - Increased PCLS - Lower margin 8#5Items of Note in Q1/09 Scotiabank Pre-tax After-Tax Gain/(Loss) ($MM) ($MM) AFS securities write-downs (236) (160) Other: Securities gains Underlying Gains Net AFS securities write-downs CDOS write-down Total EPS Impact 116 98 (120) (62) Other: Securities gains SC: Securities gains (24) (43) (24) Other/Other Income (19) (163) (86) 9 (9) cents Scotiabank Revenues (TEB) ($ millions) Good Revenue Growth 3,421 2,957 2,586 1,385 1,025 550 1,932 2,036 2,036 Q1/08 Q4/08 Q1/09 Other income Net Interest Income (TEB) Q1/09 vs. Q4/08 revenues: up 32% ■ net interest income unchanged + forex, full quarter impact of Q4/08 asset growth + ALM hedging loss in Q4/08 - lower margin ■ other income up 100%+ + Q1/09 write-downs significantly lower than Q4/08 + strong broad-based trading revenues, net of derivatives trading loss & excellent investment banking revenues + forex, acquisitions & higher securitization revenues - lower wealth management revenues Q1/09 vs. Q1/08 revenues: up 16% ■ net interest income up 5% + forex, acquisitions, & strong broad-based asset growth lower margin including increased liquidity premiums ■ other income up 35% + strong broad-based trading revenues, net of derivative trading loss, & excellent investment banking revenues + widespread increase in transaction-driven revenues + forex, acquisitions & higher securitization revenues - lower wealth management revenues 10#6Scotiabank Scotiabank Lower Net Interest Margin 1.79 1.79 (%) 1.76 1.68 1.53 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 All-Bank: (15) bps qtr/qtr · competitive pricing pressures on deposits - decreased tax-exempt dividend income significant decline in interest rates + wider spreads in corporate banking + ALM hedging loss in Q4/08 11 Expenses Well Managed Non-interest expenses ($ millions) 2,010 1,944 1,669 1,058 1,130 978 382 388 321 504 492 370 Q1/08 Q4/08 Q1/09 Salaries & employee benefits ■Premises & technology Other Q1/09 vs. Q4/08 expenses: up 3% - higher performance based compensation due to increased capital markets revenues - negative impact of forex - increased business & capital taxes + lower advertising & travel expenses Q1/09 vs. Q1/08 expenses: up 20% ■ expenses up 7% excluding FX, acquisitions & higher performance-based compensation - higher salaries & premises, driven by growth initiatives, including branch expansion higher business taxes + lower stock-based compensation 12#7Scotiabank 373 Net Income ($ millions) 466 438 Q1/08 Q4/08 Q1/09 Canadian Banking - Solid Quarter Q1/09 vs. Q4/08 net income: down 6% - revenues down 1% - lower margin due to competitive pricing pressures on deposits & higher liquidity costs + strong deposit growth + expenses down 1% + seasonally lower initiative & discretionary spending provisions up $48MM Q1/09 vs. Q1/08 net income: up 18% + revenues up 13% + strong asset & deposit growth mortgages +11%, Scotia Line +15% personal term deposits +10%, cheq./savings +12% + higher margin due to lower funding interest rates expenses up 5% acquisitions & full yr. impact of '08 growth initiatives provisions up $64MM 13 Scotiabank Net Income ($ millions) 289 227 International Banking Record Quarter 388 Q1/08 Q4/08 Q1/09 Q1/09 vs. Q4/08 net income: up 71% + revenues up 21% + strong volume & transaction-driven growth + positive impact of forex + securities write-downs in Q4/08 lower margin expenses up only 2% negative impact of forex provisions up $26MM Q1/09 vs. Q1/08 net income: up 34% + revenues up 36% + forex & acquisitions + organic volume growth, strong forex revenues & - higher transaction-driven revenues lower margin, higher securities gains in Q1/08 expenses up 36% ■ expenses up 16% excl. forex & acquisitions branch expansion & Q1/08 expense recoveries provisions up $86MM - 14#8Scotiabank Scotia Capital Very Strong Net Income 191 Net Income ($ millions) 44 300 Q1/08 Q4/08 Q1/09 Q1/09 vs. Q4/08 net income: 100%+ + revenues up 100%+ + significantly lower write-downs + higher corporate loan volumes, spreads & fees + excellent underlying capital markets revenues - derivative trading losses & lower FX revenues expenses up 17% - higher performance-based compensation + provisions flat Q1/09 vs. Q1/08 net income: up 57% + revenues up 74% + broad based growth + lower write-downs expenses up 52% higher performance-based compensation - increased salaries, other personnel, technology & support costs Scotiabank 15 Other Segment* Impacted by Funding Costs & Write-downs Net Income ($ millions) Q1/08 (18) Q4/08 Q1/09 Q1/09 vs. Q4/08 net income + higher securitization revenues + favourable change in FV of financial instruments used for ALM + lower net securities write-downs relatively higher funding costs compared to declining transfer pricing rates (422) (284) Q1/09 vs. Q1/08 net income - relatively higher funding costs compared to declining transfer pricing rates - write-downs on AFS securities - unfavourable change in FV of financial instruments used for ALM + higher securitization revenues * includes Group Treasury and other corporate items, which are not allocated to a business line 16#9Scotiabank Available-for-Sale Securities Portfolio Q1/09, $ billions Fair Value Unrealized Gains (Losses) 23.5 0.8 Government bonds Other Debt Auto-based securitization 6.9 (0.3) Financial industry bonds 6.5 (0.6) Corporate bonds 3.3 (0.3) CDOS/CLOS 0.9 (0.7) Total Other debt 17.6 (1.9) Equities Common Preferred Total Equities Total 2.5 (0.3) 0.4 (0.2) 2.9 (0.5) 44.0 (1.6)* * Excludes fair value of hedges of $(0.2)B Scotiabank 17 82% AAA 98% investment grade 88% investment grade Weighted Average: AA Risk Review Brian Porter Group Head, Risk & Treasury 18#10Q1/09 Risk Overview Scotiabank Scotiabank Managing through challenging markets - higher provision for credit losses Credit portfolios better positioned than in previous downturns diversification, higher quality lending portfolios 19 Higher Provision for Credit Losses Specific provisions, $ millions Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Canadian P&C Retail 79 82 Commercial 12 20 91 102 99 728 77 78 122 22 29 33 107 155 International P&C Retail 64 69 Commercial (34) 30 60 Scotia Capital (10) 6266 81 105 130 (25) (15) (14) 56 90 116 (9) 4 Total 111 153 159 ༅༔ 10 10 207 281 PCL ratio (bps) 18 24 23 29 37 20#11Scotiabank $ millions Gross Impaired Loan Formations Q4/08 Q1/09 Canadian P&C - Retail 277 328 - Commercial 39 31 316 359 International P&C - Retail 215 336 - Commercial 78 142 293 478 Retail: higher formations in residential mortgages & auto-related portfolios Retail: higher formations across division, reflecting increase in delinquencies and underlying growth Commercial: classification of a number of accounts in Puerto Rico, Mexico & Chile Scotia Capital - U.S. 6 60 60 Scotia Capital: classification of two. accounts in the U.S. - Canada & Other 6 60 Total 615 897 Scotiabank 21 Diversified Lending Portfolios 1999 Q1/09 Canadian Retail 47% Canadian Retail 41% International Retail 3% Scotia Capital 30% U.S. 16% Canada 8% Other 6% Canadian Commercial 16% International Commercial 10% 22 International Retail 8% Canadian Commercial 9% Scotia Capital 23% International Commercial 13% U.S. 10% Canada 7% Other 6%#12Scotiabank . All-Bank Retail Lending - Overview Diversified Product Mix Higher level of secured loans compared to 1990: - 90% secured, up from 83% - Mortgages now 73% of portfolio, up from 54% 53% of credit lines and cards secured Canadian mortgages: 41% insured, uninsured LTV % in mid-50s 118 • Actively Managing Portfolios Monitoring unsecured and auto lending • Centralized credit exceptions • Increased collection efforts Proactive support for customers with good credit history Q1/09 $180 Billion Canadian International 29 13 2 11 7 Mortgages* Credit Lines & Cards Personal Loans before securitizations 23 Scotiabank Canadian Retail Lending (Outstandings at Q1/09, $ billions) 118* 20 Total = $158B -- 92% secured 11 9 % of total Mortgages 75% Lines of Credit Personal Loans Credit Cards** 12% 7% 6% PCL Q1/08 Q1/09 Q1/08 Q1/09 Q1/08 Q1/09 Q1/08 $mm 2 2 17 24 27 59 33 Q1/09 37 % of avg. 1 1 43 49 129 210 151 161 loans (bps) * before securitizations 24 ** includes Scotialine VISA#13Scotiabank International Retail Lending (Outstandings at Q1/09, $ billions) 11.2 3.4 1.0 Personal Loans (total = $7.2B) Credit Cards (total = $2.2B) ■Mortgages (total = $13.4B) 5.1 1.4 4.0 6.8 0.5 1.1 2.5 0.1 3.2 1.3 2.8 0.6 0.6 C&CA* Mexico Chile Peru % of total 49% 22% 18% 11% PCL Q1/08 Q1/09 Q1/08 Q1/09 Q1/08 Q1/09 Q1/08 Q1/09 $mm 14 26 39 58 1 18 10 28 % of avg. loans (bps) 70 100 333 439 23 192 360 495 Caribbean and Central America Total Portfolio = $23B -- 76% secured 25 Scotiabank All-Bank - Corporate & Commercial Lending - More Diversified, Higher Quality Q4/99 Q1/09 ◉ Corporate & commercial portfolios as % of total portfolio 56% 45% ■ U.S. portfolio as % of total portfolio 16% 10% % corporate loans investment grade 50% 73% ↑ Significant reduction in leveraged loans 26#14International Commercial Lending - Scotiabank Diversified by Geography & Industry Peru, 10% Chile, 18% Asia/Pacific (10 countries) 27% Mexico, 11% Scotiabank C&CA, 28% Other, 6% Solid asset quality ■ well secured historical PCL ratio 35 bps over past 18 years Industry exposure manageable Hotels/Resorts - $1.8 billion exposure in the Caribbean; with LTV of 50% Write-offs <$15 million over past two decades Mining $450 million exposure in Chile & Peru (economic fundamentals still good in these 2 countries) 27 Corporate and Commercial Lending - North America and Europe Focus Areas Size Well Diversified, Good Quality Auto* $5.6B $3B to dealers & floorplans (70% non-North American) $1.2B to finance & leasing companies $800 mm to parts companies at senior secured levels < $200 mm to North American OEM's Real Estate** $10B Media*** $4B Canada 73%, US 27% 51% residential, $125 mm related to U.S. construction Focus on top-tier customers US 50%, Canada 39%, Europe 11% 29% publishing / directories, 24% broadcasting 57% rated Investment Grade Tightened lending criteria Total PCL-Q1/09: $7mm; 2008: nominal OEM, Parts, Finance and Dealers **Residential, REIT, Retail and Office *** Publishing and Broadcasting 28#15Scotiabank Scotiabank 2009 Risk Outlook Challenging credit markets will continue Portfolios are better positioned relative to previous cycles Proactively managing risk 29 Business Line Update Chris Hodgson Group Head, Canadian Banking Rob Pitfield Group Head, International Banking Stephen McDonald Group Head, Global Corporate & Investment Banking, & Co-CEO Scotia Capital 30#16Scotiabank • Scotiabank Canadian Banking Update Maintain positive operating leverage & earnings momentum Maintain focus on credit risk discipline Focus on key segments & products - deposits & insurance Fully leverage recent acquisitions/investments - E*TRADE, CI & Dundee Wealth 31 International Banking Update Focus on deposits & fee-based businesses • Continue to seek cost & productivity improvements . Very focused on credit risk management 32#17Scotiabank • Scotiabank Scotia Capital Update Benefiting from changing competitive landscape Continuing to re-tool businesses Executing an integrated business model Continue to prudently manage risks 33 Outlook Rick Waugh President & Chief Executive Officer 34#18Scotiabank Outlook ■ Better positioned • • portfolios in better shape vs. previous downturns disciplined risk and expense management • strong capital 35 Scotiabank Appendices 36#19Scotiabank Impact of Forex Impact ($ millions) Q1/09 vs. Q4/08 Net Interest Income (TEB) 56 Other Income 26 Q1/09 vs. Q1/08 146 64 Non-interest expenses Net income (15) (67) 54 106 EPS (diluted) 5 cents 11 cents Scotiabank Average Rates Q1/09 Q4/08 Q1/08 $US/$CAD 0.82 0.91 1.01 Mexican peso/$CAD 11.06 10.18 10.99 Peruvian new sol/$CAD 2.56 2.73 3.03 Chilean peso/$CAD 531.0 518.40 497.85 37 Revenues (TEB) ($ millions) 1.714 1,702 1,510 Canadian Banking Strong Volume Growth Q1/09 vs. Q4/08 revenues: down 1% - 8 bps decrease in margin + record deposit growth, +$7.8B (6%), slowing asset growth (1% ex. CI) + stable Wealth Mgmt. revenues: acquisitions offset lower revenues relating to market conditions Q1/09 vs. Q1/08 revenues: up 13% Retail & Small Business + strong asset & deposit growth + widespread growth in fee-based income Commercial Banking + strong deposit & asset growth + higher margin, benefitting from re-pricing of loans Wealth Management + acquisitions: E*TRADE, stake in CI Financial lower mutual fund & full-service brokerage revenues given difficult market conditions 1,038 1,041 933 397 282 384 295 279 277 Q1/08 Q4/08 Q1/09 Retail & Small Business ■Commercial Banking ■Wealth Management 38#20Scotiabank International Banking FX, Acquisitions, Business Growth Boost Revenues Revenues (TEB) ($ millions) 1,418 1,168 359 1,040 355 322 522 464 398 537 320 349 Q1/08 Q4/08 Q1/09 Mexico Caribbean & Central America Latin America & Asia Q1/09 vs. Q4/08 revenues: up 21% ■ Mexico + strong forex revenues negative impact of forex ■ Caribbean & Central America + forex, higher margin + widespread growth in fee-based revenue ■ Latin America & Asia + broad-based loan growth, wider spreads in Asia + $120MM of write-downs in Q4 Q1/09 vs. Q1/08 revenues: up 36% ■ Mexico + volume growth, higher margin + higher forex revenues, investment banking income ■ Caribbean & Central America + forex & acquisitions + P&C volume growth, partly offset by lower NIM ■ Latin America & Asia + acquisitions in Peru & Chile, forex + loan growth, forex revenues, & transaction-driven growth, partly offset by higher securities gains in Q1/08 39 Scotiabank 405 Scotia Capital Revenues: Best Quarter Since 2002 Revenues (TEB) ($ millions) 704 308 151 232 396 254 208 Q1/08 Q4/08 Global Capital Markets (GCM) Q1/09 Global Corporate & Investment Banking (GC&IB) Q1/09 vs. Q4/08 revenues: up 100%+ + significantly lower write-downs Global Corporate & Investment Banking + good growth in lending volumes, spreads & higher loan origination fees + record investment banking + higher acceptance & credit fees Global Capital Markets + record quarter for fixed income & precious metals + very strong institutional equity - derivative trading losses very strong FX, down from record Q4 Q1/09 vs. Q1/08 revenues: up 74% + significantly higher corporate loan volumes, interest margins, loan origination & other credit fees + strong revenues across most other income categories + lower write-downs 40#21Scotiabank Strong Relative PCL Performance Specific Provisions as % of Average Loans and Acceptances 0.70% 0.60% 0.50% 0.40% 0.30% 0.24% 0.20% 0.16% 0.14% 0.10% 0.00% 2005 2006 Scotiabank 0.32% 0.26% 0.24% 0.13% 2007 BNS 4 Cdn. Bank Peers 41 0.51% 0.37% 2008 Q1/09 Gross Impaired Loans Gross Impaired Loans, $ millions Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Canadian P&C Retail Commercial 422 444 472 523 621 207 244 228 238 262 629 688 700 761 883 International P&C Retail 559 664 688 833 997 Commercial 566 604 674 776 919 1,125 1,268 1,362 1,609 1,916 Scotia Capital 88 56 101 124 186 Total 1,842 2,012 2,163 2,494 2,985 Total GIL as % loans & acceptances 0.70 0.74 0.76 0.82 0.97 42#22Scotiabank ☐ Bank-Sponsored Multi-Seller Conduits (Q1/09, $ billions) Funded assets Weighted-average: rating (equivalent) life (years) Canadian Conduits 3.4 U.S. Conduit 7.3 AA- or higher 83% A or higher 1.1 1.3 Volumes down 12% vs. last quarter Assets mostly receivables Auto loans/leases: 45%; trade: 20%; credit cards/consumer: 7%; equipment loans: 10%; diversified ABS: 9% No direct CDO or CLO exposure 43 Scotiabank Trading Results Versus One-Day VaR ($ millions) 40 30 20 10 0 November 1, 2008 to January 31, 2009 - Actual P&L 1 day VaR мими ним (10) (20) (30) (40) Average one-day VaR: $21.7mm in Q1/09 vs $20.1mm in Q4/08 44#23Scotiabank # days 6 2 Trading Revenue Q1/09 Trading Revenue ($ millions) (20) (15) (10) (5) 0 5 10 15 20 25 30 ■ 87% days had positive results in Q1/09 vs. 82% in Q4/08 45