#1Scotiabank Scotiabank Investor Presentation Fourth Quarter, 2008 December 2, 2008 , Caution Regarding 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; 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 of new technologies 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 56 of the Bank's 2007 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" section in this document is based on the Bank's views and the actual outcome is uncertain. Readers should consider the above-noted factors when reviewing this section. 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 Scotiabank Overview Rick Waugh President & Chief Executive Officer 3 2008 - Overview ■ Challenging environment - Difficult market conditions and unprecedented volatility in global financial markets ■ Net income $3.1 billion, EPS - $3.05 - - Q4/08: $315 million, EPS - $0.28 - $642 million write-downs in Q4/08 ■ Core earnings remain solid 4#3Scotiabank net income, $ millions Core Earnings Remain Solid 1,724 1,564 1,250 1,186 1,125 787 Canadian Banking International Scotia Capital 106 Other* (557) 2007 2008 Year-over-year Canadian Banking: Strong deposit & asset growth & positive impact of acquisitions, partly offset by higher PCLs, slightly lower margin, 2007 Visa gain International: Very strong loan growth & positive impact of acquisitions, offset by higher growth- related expenses, PCLs, tax rate, and items of note (writedowns in 2008, Visa gain in 2007) Scotia Capital: Record revenues in certain businesses, strong revenue growth in loan portfolios, more than offset by writedowns, lower loan loss & interest recoveries, and impact of difficult markets Other: Increased liquidity & funding costs, lower securities gains, and items of note includes Group Treasury and other corporate items, which are not allocated to a business line Scotiabank 5 Strong Capital Capital ratios (%) 11.5 11.1 Total 10.5 9.8 Tier 1 9.3 9.3 TCE 7.6 7.2 7.3 Q4/07 Q3/08 Q4/08 6#4Scotiabank Scotiabank Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 7 Items of Note (1) Reported Net Income ($MM) Q4 2008 315 3,140 Item of Note (After-tax $MM) Q4 2008 Valuation Adjustments Conduit CDOs Other CDOS Other AFS Securities SIVS/ABCP Trading Counterparty Lehman Brothers (137) (166) (122) (176) (150) (150) (7) (72) Other ALM Hedging Total (117) (117) (32) (109) (109) (642) (822) (1) See slide 35 for breakdown of Q4/08 items by business line and income statement line. 8#5Scotiabank Solid Core Results (1) Core Change Q4/08 Items Q4/08 Qtr/Qtr Yr/Yr Reported of Note Core Net income ($MM) $315 $642 $957 (5)% 8% EPS $0.28 $0.65 $0.93 (5)% 6% ROE 6.0% 19.2% (180) bp (30) bp Productivity ratio 75.2% 54.9% 60 bp (40) bp Quarter over quarter (core) + Strong asset growth + Wider corporate spreads + Impact of acquisitions - · Decrease in securities gains - Lower wealth management revenues - Increased loan losses (1) Adjusted for items of note (Q4/08: $(642)MM after-tax, Q4/07: $65MM after-tax). See slides 35 and 36 for more details. 9 Scotiabank Good Underlying Revenue Growth Revenues (TEB) ($ millions) 3,477 3,544 (1) 3,240 (1) 796 (1) 1,428 1,308 (1) 550 162 (1) 1,932 2,049 2,036 Q4/07 Q3/08 Q4/08 Other income Writedowns Net Interest Income (TEB) Q4/08 vs. Q4/07 revenues: up 9% (1) ■ net interest income up 14% (1) + broad based asset growth + positive impact of acquisitions lower margin ■ other income up 3% (1) + record forex & precious metals trading, higher securitizations & acquisitions - lower underlying securities gains, securities trading Q4/08 vs. Q3/08 revenues: up 2% (1) ■ net interest income up 7% (1) + strong asset growth, including acquisitions + positive impact of forex + stable underlying margin ■ other income down 6% (1) - lower capital markets related revenues: lower underlying securities gains, underwriting & securities trading + higher securitization revenues + record forex & precious metals trading (1) Adjusted for items of note (Q4/08: $(958)MM pre-tax, Q4/07: $54MM pre-tax). See slides 35 and 36 for more details. 10#6Scotiabank % All Bank Stable All-Bank Margin 1.87 1.79 1.79 1.82(1) 1.76 1.68 Canadian Banking 2.52 - 2.49 2.49 2.35 2.33 International Banking 4.32 4.18 4.14 4.10 4.27 Scotia Capital 0.96 0.78 0.69 0.66 0.60 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 All-Bank: +3 bps qtr/qtr (1) + higher margins in Latin America, including acquisitions in Peru + wider spreads in U.S. & European Corporate relatively higher funding costs - increase in non-earning assets Canadian Banking: (3) bps qtr/qtr - change in product mix International Banking: +13 bps qtr/qtr Scotia Capital: +12 bps qtr/qtr (1) Adjusted for $(162)MM pre-tax impact of ALM Hedging. See slide 35 for more detail. 11 Scotiabank Higher Expenses Acquisitions, Forex & Growth Initiatives Non-interest expenses ($ millions) 1,944 1,889 1,792 1,058 963 1,068 397 362 368 467 453 489 Q4/07 Q3/08 Q4/08 Q4/08 vs. Q4/07 expenses: up 8% - negative impact of forex acquisitions & branch expansion led to higher salaries & premises & technology increased pension & benefit costs vs. low level in Q4/07 + lower performance-based & stock-based compensation + decrease in professional fees & capital taxes Q4/08 vs. Q3/08 expenses: up 3% increase due to acquisitions & forex + decrease in performance-based & stock- based compensation + lower capital taxes Salaries & employee benefits ■Premises & technology Other 12#7Scotiabank 347 (1) Net Income ($ millions) 463 Canadian Banking Results Another Strong Quarter 466 Q4/08 vs. Q4/07 net income: up 35% (1) + revenues up 14% (1) + strong deposit growth & continued asset growth ■ term deposits +12%, chequing/savings +15% ■ mortgages +11%, ScotiaLine +15% +16 bps increase in margin expenses well managed, up only 1% acquisitions & new branch openings, partly offset by lower volume related expenses in Wealth Mgmt. provisions up $29MM mainly due to increased commercial provisions Q4/08 vs. Q3/08 net income: up 1% + revenues up 2% + strong deposit growth & continued asset growth - expenses up 3% acquisitions & growth initiative spending Q4/07 Q3/08 Q4/08 (1) Adjusted for impact of Visa gain in Q4/07 ($111MM pre-tax, $92MM after-tax) 13 Scotiabank Net Income ($ millions) International Banking Solid Underlying Results 335 329 (1) 288 (1) 102 (1) 227 Q4/08 vs. Q4/07 net income: up 14% (1) + revenues up 29% (1) + acquisitions, solid asset growth, & broad based increase in fee income partly offset by narrower margin expenses up 29% - - acquisitions, growth initiative spending & forex provisions up $63MM due to asset growth, acquisitions, & higher retail delinquency in Mexico Q4/08 vs. Q3/08 net income: down 2% (1) + revenues up 4% (1) + acquisitions, asset growth, higher margin & forex lower underlying securities gains (Q3 included IPO gain on Mexican stock exchange) (1) Q4/07 Q3/08 Q4/08 - expenses up 8% acquisitions & forex Adjusted for items of note (Q4/08: $(120) MM pre-tax, $(102)MM after-tax, Q4/07: $91MM pre-tax, $71MM after-tax). See slides 35 and 36 for more details. 14#8Scotiabank (1) Net Income ($ millions) Scotia Capital Impacted by Writedowns 349(1) 288(1) 59(1) 297 229 305 44 Q4/07 Q3/08 Q4/08 Q4/08 vs. Q4/07 net income: up 21% (1) + revenues up 20%(1) + record forex & precious metals trading results + higher corporate loan volumes, interest & spreads lower tax-exempt dividend income - expenses up 11% - increased hiring & technology expenses + lower professional fees & discretionary spending - provisions up $20MM: one new provision, less recoveries Q4/08 vs. Q3/08 net income: up 18% (1) + revenues up 13% (1) + higher corporate banking interest profit + record forex & precious metals trading, stronger underlying derivatives revenues - lower securities trading & Scotia Waterous revenues + expenses down 2% - + lower performance based compensation increased hiring costs Adjusted for items of note (Q4/08: $(503)MM pre-tax, $(305)MM after-tax, Q4/07: $(92)MM pre-tax, $(59)MM after-tax). See slides 35 and 36 for more details. Scotiabank 15 Business Line Outlook & Priorities Chris Hodgson Group Head, Canadian Banking Rob Pitfield Group Head, International Banking Mike Durland Group Head, Global Capital Markets & Co-CEO Scotia Capital 16#9Scotiabank Canadian Banking 2009 Priorities • Maintain positive operating leverage • Focus on key segments & products • • Fully integrate recent acquisitions Take advantage of market opportunities Scotiabank • 17 International Banking 2009 Priorities Focus on deposits & fee-based businesses Maintain positive operating leverage - Focus on cost & productivity improvements . Increased focus on credit risk management • Seek opportunistic acquisitions 18#10Scotiabank Scotia Capital 2009 Priorities • • Continue to prudently manage credit, market and operational risks Execute global sectoral strategy by expanding coverage of energy, mining, & power sectors & institutional investors Re-focus the business Expand key platforms/capabilities Scale back non-core businesses Scotiabank 19 Risk Review Brian Porter Group Head, Risk & Treasury 20#11Scotiabank ☐ Q4/08 Risk Overview Managing through challenging market conditions PCL: $207mm vs $159mm in Q3/08 Gross impaired loan formations: $615mm vs $629mm in Q3/08 Average one-day VaR: $20.1mm vs $15.8mm in Q3/08 Areas of current focus Bank-sponsored multi-seller conduits Automotive exposure - International retail portfolios Outlook 21 Provision for Credit Losses Scotiabank Specific provisions, $ millions Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Canadian Banking Retail Commercial 72 6 78 225 79 82 12 20 22 91 102 728 77 78 29 99 107 International Banking Retail 99 Commercial 56 64 69 81 105 (29) (34) (25) (15) 27 30 60 56 90 Scotia Capital (10) (10) (9) 4 10 95 111 153 159 207 22#12Scotiabank 0.60% 0.50% 0.40% Strong Relative PCL Performance Specific Provisions as % of Average Loans and Acceptances 0.43% 0.44% 0.56% 0.32% 0.30% 0.26% 0.29% 0.24% 0.23% 0.20% 0.18% 0.14% 0.13% 0.10% 0.00% 2006 2007 Q1/08 Q2/08 Q3/08 Q4/08 BNS 4 Cdn. Bank Peers Scotiabank ($ millions) 23 Trend in Gross Formations 629 83 6 615 470 293 444 61 265 1 178 342 126 77 316 292 264 257 281 Q4/07 Q1/08 Q2/08 Q3/08 Cdn. Banking International Scotia Capital 24 Q4/08#13Scotiabank Trading Results Versus One-Day VaR ($ millions) 232 40 30 20 10 0 (10) (20) (30) (40) August 1, 2008 to October 31, 2008 - Actual P&L 1 day VaR Average one-day VaR: $20.1mm in Q4/08 vs $15.8mm in Q3/08 25 Scotiabank 10 # days Trading Revenues Q4/08 trading revenues ($ millions) 8 6 4 2 0 (40) (35) (30) (25) (20) (15) (10) (5) 0 5 10 15 20 25 30 35 40 ■80% of days had positive results in Q4/08 vs. 83% in Q3/08 26#14Scotiabank Bank-Sponsored Multi-Seller Conduits Canadian (Q4/08, $ billions) Conduits U.S. Conduit Funded assets 3.8 8.4 Commitments 0.5 4.4 Total exposure 4.3 12.8 Weighted-average: rating (equivalent) AA- or higher 92% A or higher life (years) 1.0 1.2 Assets mostly receivables Auto loans/leases: 42%; trade: 19%; credit cards/consumer: 11%; equipment loans: 8%; diversified ABS: 8% No direct CDO or CLO exposure Scotiabank 27 Auto Industry Exposure Manageable $ billions Q4/08 Q3/08 Q4/07 North American & European Wholesale* Original Equipment Manufacturers (OEM) 0.5 0.5 0.2 Finance & Leasing 1.2 1.0 0.6 Parts Manufacturers 0.7 0.6 0.8 Dealers/Floorplan 2.8 2.7 2.4 5.2** 4.8 4.0 Investment Grade 63% 60% 48% Loss Ratio (2007 & 2008) 9bps 9bps Consumer auto-backed securities 7.8 7.1 6.2 (primarily GMAC) Bank sponsored & third party conduits 7.8 8.2 10.2 * loans and acceptances ** * represents 4% of Business & Government loans and acceptances 28#15Scotiabank International Retail Loan Portfolios (Outstandings at Q4/08, $ billions) 10.0 9.8 Personal Loans 8.0 3.1 Credit Cards ■Mortgages 0.8 6.0 5.5 1.6 4.0 3.5 0.6 5.9 1.0 +0.1 2.0 2.0 3.3 0.8 2.4 0.6 0.6 0.0 C&CA* Mexico Chile Peru PCL 2008 2007 2008 2007 2008 2007 2008 2007 $mm 68 43 186 85 20 12 45 25 % of avg. loans 0.77 0.54 3.75 1.97 0.64 0.89 3.36 2.54 Caribbean and Central America ■ 76% of total retail loan portfolio secured Scotiabank 29 2009 Risk Outlook Areas of current focus - manageable Expect provisions for credit losses to increase within risk tolerances Canadian Banking ⋅ impact of economic slowdown International • impact of U.S. weakness Banking Scotia Capital impact of lower commodity prices • lower commercial recoveries ⚫impact of U.S. weakness on certain industries lower reversals and recoveries 30#16Scotiabank Scotiabank Outlook Rick Waugh President & Chief Executive Officer 31 2009 Priorities ■ Drive sustainable revenue growth - leverage acquisitions/investments take advantage of market opportunities ■ Prudent capital management ■ Leadership ■ Maintain strong focus on risk management Expense control 32#17Scotiabank Targets ■ EPS growth: 7-12% ■ ROE: 16-20% ■ Productivity ratio - less than 58% ■ Maintain strong capital ratios 33 Scotiabank Appendix 34#18Scotiabank Items of Note in Q4/08 Gain/(Loss) Pre-tax ($MM) After-tax ($MM) EPS ($) Financial statement impact (Pre-tax) Q4/08 Conduit CDOs (245) (137) SC: Securities Gains Other CDOs (45) (24) SC: Securities Gains (73) (70) Int'l: Securities Gains (50) Other/Other Income (23) (45)* (35) Other: Securities Gains (35) Other/Other Income (10) Other AFS Securities (42) (27) SC: Securities Gains (47) (32) Int'l: Securities Gains (128) (91) Other: Securities Gains Lehman Brothers (171) (117) SC: Trading ALM Hedging (162) (109) Other: Net Interest Income Total (958) (642) (0.65) *Includes SIV writedown $(11)MM pre-tax, $(7)MM after-tax Scotiabank 35 Items of Note in Q4/07 Gain/(Loss) Pre-tax After-tax ($MM) ($MM) EPS ($) Financial statement impact (Pre-tax) Q4/07 Gain on Visa restructuring 111 92 Cdn: Other/Other income 91 71 Int'l: Other/Other Income Gain on sale of bond 43 35 SC: Other/Other Income index business Conduit CDOs SIVS/ABCP (115) (80) SC: Trading (20) (14) SC: Securities Gains (56) (39) Other: Securities gains Total 54 65 0.07 36#19Scotiabank Impact of Forex Impact ($ millions) Q4/08 vs. Q4/08 vs. 2008 vs. Q3/08 Q4/07 2007 Net Interest Income (TEB) 40 70 (221) Other Income (23) (24) (80) Non-interest expenses (31) (47) 146 Net income (13) (5) (104) EPS (diluted) (1) cent (10) cents Spot Rate Average exchange rate Oct. 31/08 2008 2007 Q4/08 Q3/08 Q4/07 0.83 $US/$CAD 0.97 0.91 0.91 0.99 0.98 10.47 Mexican peso/$CAD 10.47 9.97 10.18 10.16 10.79 Peruvian new sol/$CAD 2.86 2.89 2.73 2.85 3.07 Chilean peso/$CAD 490.44 480.77 518.40 494.32 507.61 37 Continued Strong Asset Growth Scotiabank average assets, $ billions 13% 456 Residential mortgages 5% 481 457 115 403 111- 109: 95: Personal loans 49 & credit cards 45 45 40 Business & 123 112 116 government 88 (includes BA's) Securities 94 96 96 98 Other 82 94 2007 Yr/Yr 2008 Business & government: +27% Residential mortgages: +14% Personal loans +13% 38 89 100 Q3/08 Qtr/Qtr Q4/08 Personal Loans: +8% Business and government loans: +6% Residential mortgages: +3%#20Scotiabank Canadian Banking - Market Share Deposit Momentum Continues Qtr/Qtr Yr/Yr Residential Mortgages (3) bps (9) bps Personal Term Deposits +12 bps +87 bps Total Personal Deposits +16 bps +61 bps Mutual Funds +9 bps +28 bps Canadian Banking market share figures as at September 2008 39 Scotiabank ($ millions) 350 300 Trading Revenues 250 200 150 247 100 50 0 Q3 Reported 47 47 -74 FX & Prec. Metals Derivative & Other (ex. Lehman) 40 -171 61 Securities Lehman Trading Loss Q4 Reported#21Scotiabank Other Segment (1) Impacted by Writedowns Q4/08 vs. Q4/07 net income - increased funding volumes, relatively higher cost for liquidity & hedging of interest rate risk - lower underlying securities gains + higher securitization revenues + lower expenses Net Income ($ millions) Q4/07 Q3/08 Q4/08 Reported (73) (85) (422) Items of Note (2) 39 235 Underlying (34) (85) (187) Q4/08 vs. Q3/08 net income - increased funding volumes, relatively higher cost for liquidity & hedging of interest rate risk - lower underlying securities gains + higher securitization revenues + lower expenses (1) includes Group Treasury and other corporate items, which are not allocated to a business line (2) see slides 35 and 36 for more details on items of note. 41 Gross Impaired Loan Formations Scotiabank Q4/08. $ millions Canadian Banking - Retail - Commercial International Banking Retail - Commercial 277 39 316 215 78 293 Scotia Capital - U.S. 6 - Canada & Other 6 Total 615 Canadian Retail: formations reflect growing portfolio size; underlying credit trends remain very good Canadian Commercial: underlying credit quality stable International Retail: formations across division, largely reflecting underlying growth and increase in delinquencies International Commercial: mainly additional classifications in Chile Scotia Capital: additional classification in one account in the U.S. 42