#1Fixed Income Investor Presentation Fourth Quarter, 2014 Scoti You're ric nk 03:31:41PH 1:8622 Scotiabank™#2Caution 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 U.S. Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may include, but are not limited to, statements made in this Management's Discussion and Analysis in the Bank's 2014 Annual Report under the headings "Overview-Outlook," for Group Financial Performance "Outlook," for each business segment "Outlook" and in other statements regarding 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, U.S. 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 financial performance, including uncertainties associated with critical accounting assumptions and estimates (See "Controls and Accounting Policies - Critical accounting estimates" in the Bank's 2014 Annual Report, as updated by quarterly reports); the effect of applying future accounting changes (See "Controls and Accounting Policies - Future accounting developments" in the Bank's 2014 Annual Report, as updated by quarterly reports); 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; increasing cyber security risks which may include theft of assets, unauthorized access to sensitive information or operational disruption; 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 "Risk Management" section starting on page 65 of the Bank's 2014 Annual Report. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2014 Annual Report under the heading "Overview- Outlook," as updated by quarterly reports; and for each business segment "Outlook". 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. 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. 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 1#3Agenda • Canadian Economy • • Scotiabank Overview Risk Mortgage Market Funding Scotiabank 2#4Canadian Economy#5Canada Well Positioned Among G7 Despite Slower Growth Canada 11th largest economy in the world with a growing 35 million population, driven mainly by immigration Consistent record of meeting or exceeding average G7 GDP trends Manageable Canadian government deficits, strong fiscal position among G7 Annual % change 3 2 Real GDP Growth General Government Net Financial Liabilities % of nominal GDP 160 140 120 100 85.1 80 67.2 69.4 61.6 60 64 40.1 44.1 40 20 0 Canada Germany U.K. France OECD U.S. 0 U.S. U.K. 2000-2013 2014F-2016F Canada Euro zone Japan Forecasts as at December 2, 2014. Source: Scotiabank Economics. Government Financial Deficits as % of GDP 2 0.2 137.2 0 117.4 -2 -4 -3.0 -3.0 -4.2 -6 -5.8 -5.8 -8 -8.2 -10 Germany Canada Italy France United United Japan States Kingdom Italy Japan Source: OECD (2013 estimates); Scotiabank Economics. As at December 2, 2014. Scotiabank Source: IMF (2013 estimates); Scotiabank Economics. As at December 2, 2014.#6Strength of the Canadian Financial System Strengths • Effective regulatory framework 。 Single regulator for major banks Conservative capital requirements Proactive policies and programs • Risk management practices 。 Few sub-prime mortgages 。 Relatively little securitization Primarily originate to hold model • Canadian banks well capitalized and profitable % change 15 10 5 0 -5 Relative bank share price performance 5 year 10 year -10 Canadian Australian Banks Banks Japanese U.S. Banks Banks Source: Bloomberg; as at December 3, 2014. Swiss Banks U.K. Banks Canadian Banking System ranked World's Soundest by World Economic Forum for 7th consecutive year Global Competitiveness Report (2014-2015) Scotiabank 5#7Scotiabank Overview#8Scotiabank - Canada's Most International Bank As at Q4, 2014 (C$) Total Assets Areas in red indicate a full range of corporate, commercial, trade finance and retail services. Areas with a red dot indicate global corporate and investment banking, or capital markets businesses, Scotiabank or affiliate bank representative offices, or investment management or retail operations with less than 10 branches Scotiabank $806B Risk-Weighted Assets $312B Market Capitalization $84B Q4/14 Net Income 1, 2, 3 $1.7B $7.0B 2014 Net Income 1, 2, 3 ($6.6B in full F2013) 2014 ROE1, 2 15.5% 1, 2, 3 Productivity Ratio 53.3% 4 Capital Ratio 10.8% Geographic Footprint >55 countries # of Employees 86,932 Scotiabank Credit Ratings 5 Moody's Fitch DBRS S&P Senior Rating Aa2 AA- AA A+ Outstanding Covered Bonds Aaa AAA AAA Not Rated Outlook Negative Stable Stable Negative (1) Excludes notable Cl gain in Q3/14 (2) Excludes restructuring/accounting charges in Q4/14 (3) Taxable Equivalent Basis (4) Basel III "all-in" Common Equity Tier 1 Ratio (5) A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revisions or withdrawals at any time Scotiabank 7#9Four Diversified and Growing Platforms Business Line Diversification of earnings International Banking Focus on Lower Risk P&C Target: 70/30 Global Banking & 22% Markets 24% 34% 20% Global Wealth & Insurance 78% Personal & Commercial Wholesale 22% Canadian Banking Diversification creates stability and lowers risk Strong Canadian Base Target: 50/50 Presence in High Growth Markets International 44% 56% Canada Central America Asia * All figures based on 2014 net income (excludes Cl gain in Q3/14 and restructuring/accounting charges in Q4/14) Scotiabank Latin America Amin nd indicate a full range of corporate, comdal, trade face and tal services Areas with a red dot indicate global corporate and investment banking, or capital markets businesses, Scotiabank or attate bank presentative offices, or westment management or retail operations with len thin 10 branches 00 8#10In C$ $284B Total Deposits (avg.) $190B Q4/14 Net Income 1, 2 $556MM Productivity Ratio² 50.9% Branches 1,040 Canadian Banking Strong Canadian Base As at Q4 2014 Total Assets (avg.) International Banking Presence in Higher Growth Markets As at Q4 2014 Total Assets (avg.) Total Deposits (avg.) Q4/14 Net Income 1, 2 Productivity Ratio² Branches³ In C$ $138B $70B $344MM 57.2% 1,955 3 # of Employees 19,485 # of Employees 47,332 Total Revenue Total Revenue (2014) (2014) Asia 10% Retail & Small 77% 23% Business Commercial Banking Latin America², 4 26% 64% Caribbean & Central America Banking Net Income 1, 2 C$ millions $2,151 $1,798 $2,261 C$ millions Net Income 1, 2 $1,726 $1,558 $1,571 (1) Attributable to equity holders (2) Excludes restructuring/accounting charges in Q4/14 (3) Excludes affiliates 2012 2013 2014 (4) Includes Mexico Scotiabank 2012 2013 2014 9#11Global Wealth & Insurance Significant Growth in GWI As at Q4 2014 AUM In C$ Global Banking & Markets Niche Focus in GBM $165B As at Q4 2014 Total Assets (avg.) AUA $368B Q4/14 Net Income 1, 2 $321MM Productivity Ratio² 62.3% Total Deposits (avg.) Q4/14 Net Income 1, 2 Productivity Ratio² # of Employees 7,570 # of Employees In C$ $292B $51B $370MM 43.7% 1,996 Total Revenue² (2014) Total Revenue² (2014) Global Wealth Management 83% 17% Insurance Capital Markets 49% 51% Global Corporate & Investment Banking Net Income 1, 2 C$ millions $1,305 C$ millions $1,443 Net Income 1, 2 $1,455 $1,481 $1,207 $1,095 Scotiabank (1) Attributable to equity holders 2012 2013 2014 (2) Excludes Cl gain in Q3/14 and restructuring/accounting charges in Q4/14 2012 2013 2014 10 10#12Risk#13Strong Focus on Risk Management • • Strengths Business model is to originate and hold assets Minimal off-balance sheet assets High proportion of on-balance sheet assets are "low risk" Loans & Acceptances by Borrower as at October 31, 2014 Business & Government Residential Mortgages 32% 49% 19% Personal & Credit Cards residential mortgages • Corporate loan book is diversified with a focus on PCL Ratio as a % of Average Loans & BAS Investment Grade clients 0.60% 0.54% 0.48% Scotiabank 0.45% 0.30% 0.15% 0.39% 0.36% 0.34% 0.32% 0.00% 2009 2010 2011 2012 2013 2014 12#14Mortgage Market#15Canadian Mortgage Market Strengths • Canadians have a significant and stable amount of equity in their homes 8.0% 7.0% 6.0% · Mortgage interest is not tax deductible thus reducing the incentive to borrow 5.0% 4.0% • Residential mortgages in arrears remain low 3.0% 2.0% 1.0% High Percentage of Equity 80 Real estate equity as % of 75 Total Real estate assets 70 95 65 60 55 50 45 40 35 90 92 94 96 98 00 Source: Statistics Canada & Federal Reserve. Scotiabank Mortgage Debt Service Ratio % of disposable income Mortgage Interest Payments 0.0% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source:Statistics Canada. Canadian Residential Mortgages in Arrears 0.7 % Canada 0.6 0.5 United States 0.4 0.3 0.2 0.1 0.0 60 02 04 06 08 10 12 14 00 90 92 94 Source:CBA. 96 00 96 98 00 22 02 04 90 06 08 80 10 12 14 14#16Scotiabank's Mortgage Strategy Mortgages are a core banking product and are integral to the Canadian Banking group's profitability and customer acquisition capability • With intense competition in a moderating housing market, managing profitability and maintaining a high level of quality originations is key . Build customer relationships for retention and cross-sell additional products and services. All customers are serviced by domestic branches. Current mortgage retention is 94% • Business model is originate to hold $20 B $ 169 B Total portfolio: $189B at Q4/14 Average LTV of uninsured mortgages is 54% Freehold Condominium Scotiabank Uninsured Insured 52% 48% 15#17Funding#18Scotiabank Funding Strategy and Programs Funding Strategy Build core deposits in all of our key markets Diversification of funding by currency, program, tenor and markets • Maintain pricing relative to peers Short-Term Funding Diversified Funding Programs . USD 25 billion Bank CP program USD 3 billion Subsidiary CP program CD Programs (Yankee/USD, EUR, GBP, AUD, HKD) Term Funding & Capital . . CAD 7 billion ABS shelf (unsecured lines of credit) CAD 10 billion shelf (preferred shares, subordinated debt, common equity) . Canada Mortgage Bonds and Mortgage Back Securities • USD 1 billion Singapore MTN program • AUD 4 billion Australian MTN program • USD 15 billion global registered covered bond program (uninsured mortgages) • USD 25 billion shelf (preferred shares, subordinated debt, common equity) • USD 20 billion global public covered bond shelf (in run-off, CMHC insured mortgages) • USD 20 billion EMTN shelf (includes subordinated debt) Scotiabank 17#19Contact Information Michael Lomas Managing Director, Treasury Sales & Market Development, Group Treasury 416 866 5734 | [email protected] Mark Michalski Director, Strategy & Market Development, Group Treasury 416 866 6905 | [email protected] Peter Slan Senior Vice President & Head, Investor Relations 416 933 1273 | [email protected] For additional public information, including our Annual Report and Quarterly Results please visit: http://www.scotiabank.com/investorrelations Scotiabank 18