#1Scotiabank Investor Presentation First Quarter, 2007 March 6, 2007 Scotiabank This document includes forward-looking statements which 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. These statements 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. Forward-looking 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. The Bank cautions readers not to place undue reliance on these statements, as a number of important factors 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; the effect of changes in monetary policy; legislative and regulatory developments in Canada and elsewhere; operational and reputational risks; 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 bar of the Bank's business infrastructure; unexpected changes in consumer spending and saving habits; technological entrants and elopments; consolidation in the Canadian financial services sector; changes in tax laws; competition, both from new established competitors; judicial and regulatory proceedings; acts of God, such as earthquakes; 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 on risks the Bank faces, please see the Risk Management section in the Bank's 2006 Annual Report. The Bank cautions that the foregoing 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 foregoing 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 behalf of the Bank. 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 Securities and Exchange Commission's (SEC) website at www.sec.gov.#2Scotiabank Scotiabank 844 Overview Rick Waugh President & Chief Executive Officer Q1/07 billion dollar quarter Net Income* ($ millions) 1,012 887 928 Change Yr/Yr Qtr/Qtr Net income* $1,012 20% 14% 890 EPS $1.01 20% 13% ROE 23.0% 140 bp 190 bp Productivity ratio 53.6% (160) bp (330) bp Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 * available to common shareholders 4#3Scotiabank Earnings growth across all business lines net income available to common shareholders, $ millions 361 335 329 Domestic 268 233 316 International Q1/06 Q4/06 Q1/07 258 235 294 Scotia Capital Domestic: Robust asset and deposit growth, and strong results in wealth management. International: Record net income driven by Mexico, positive earnings impact of acquisitions and well-controlled expenses. Scotia Capital: Record net income driven by higher lending volumes in all regions and continued favourable credit conditions, partly offset by lower trading revenues Scotiabank 5 Positive operating leverage Q1/07 vs. Q1/06 (TEB) Revenue Expense Operating Growth Growth Leverage Domestic 6.5% 4.4% 2.1% International 30.0% 24.2% 5.8% Scotia Capital 1.8% 2.3% (0.5)% All - Bank 13.6% 10.4% 3.2% 6#4Scotiabank Well positioned to meet 2007 performance objectives Q1/07 Objective EPS Growth 20% VS. 7-12% ต Scotiabank ROE 23.0% VS. 20-23% Productivity 53.6% VS. <58% 7 Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 8#5Impact of new accounting standards Scotiabank Increase in common shareholders' equity $ millions Book Value Per Share Opening balance - common shareholders' equity 16,947 $17.13 Net income less dividends 596 Accumulated Other Comprehensive Income 753 Favourable foreign exchange movements 522 Other items 32 Total change common shareholders' equity Ending balance - common shareholders' equity 1,903 $1.86 18,850 $18.99 Impact of +$8 million (after tax) on income statement in Q1/07 ■ Increases to certain balance sheet items: · Securities: up $1.2 billion · Accumulated Other Comprehensive Income: up $753 million (after tax) 9 Scotiabank Net Income* ($ millions) 890 844 Financial Performance Overview 1012 Q1/06 Q4/06 Q1/07 * available to common shareholders Q1/07 vs. Q1/06 net income: up 20% ■ Total revenues up 14% Expenses up 10% ■ Favourable credit conditions - lower provisions for credit losses and higher interest recoveries Q1/07 vs. Q4/06 net income: up 14% ■ Revenues up 7% Expenses up 1% Higher provisions for credit losses - general allowance reversal in Q4/06 10#6Scotiabank Strong revenue growth-up 14% vs. Q1/06 Revenues (TEB) ($ millions) 2,830 3,214 2,999 1,881 1,605 1,783 1,225 1,216 1,333 Q1/06 Q4/06 Q1/07 Scotiabank ☐ ☐ Net Interest Income (TEB) Other Income average balances $ billions Q1/07 vs. Q1/06 revenues: up 14% ■ Broad-based asset growth, in part from recent acquisitions ■ Increased securities gains and higher underwriting and brokerage fees Partly offset by margin compression, lower trading revenue Q1/07 vs. Q4/06 revenues: up 7% ■ Volume growth in retail lending in Canada, Mexico, Caribbean and Central America Higher securities gains and increased revenues from retail brokerage, cards, investment banking and trading 11 Strong asset growth 392 375 322 39 38 35 86 79 66 199 192 78 77 77 66 Q1/06 Q4/06 Q1/07 Residential mortgages Personal Loans Business & Government (includes acceptances) Securities Other Year-over-year growth Total Assets: + 21% ■ Residential mortgages: +19% O Personal loans: +11% ■ Business & government: +30% ■ Securities: +26% 12#7Scotiabank Expenses flat quarter over quarter Non-interest expenses ($ millions) 1,708 1,724 1,562 966 1,003 934 322 327 281 420 347 394 Q1/06 Q4/06 Q1/07 Salaries & employee benefits Premises & technology Other Scotiabank Q1/07 vs. Q1/06 expenses: up 10% ■ 60% of increase due to acquisitions Remaining increase due primarily to: " higher salaries and benefits costs • increased premises, data processing and advertising expenses to support business growth initiatives Q1/07 vs. Q4/06 expenses: up 1% Salary increases and higher performance- based compensation reflecting record Q1/07 results ■ Lower seasonal spending in some categories 13 Scotiabank Mexico Contribution Scotiabank Mexico Contribution ($ mm) Q1/07 Q4/06 Q1/06 Net income in pesos, excluding inflation accounting MXP/CAD exchange rate 956 1,081 1,404 9.5 9.8 9.1 Net income in CAD, excluding inflation accounting BNS' share (97%) $101 $111 $154 $98 $108 $150 Canadian GAAP and acquisition adjustments $43 $3 $(12) Total contribution in CAD $141 $111 $138 • Year/Year - contribution up 2%; very strong retail volume growth and higher fee income offset by branch expansion costs, higher advertising expenses, and other business initiatives Qtr/Qtr - contribution up 27%; good retail volume growth, and lower performance- based compensation 14#8Scotiabank Domestic Banking Chris Hodgson Executive Vice President Domestic Personal Banking 15 Scotiabank Net Income* ($ millions) 335 329 Domestic Banking Solid earnings growth 361 Q1/06 Q4/06 Q1/07 * available to common shareholders Q1/07 vs. Q1/06 net income: up 10% ▪ Revenues up 7% from strong volume growth & higher fee income Expenses up 4% largely due to acquisitions and growth initiatives - higher performance-based compensation, partly offset by lower pension & benefit costs ■ Loan losses up modestly consistent with strong asset growth in retail portfolio Q1/07 vs. Q4/06 net income: up 8% Revenues up 1% Expenses down 5% due mostly to seasonal declines, partly offset by higher performance- based compensation & advertising expenses ■ Loan losses up from low levels in Q4/06 16#9Scotiabank revenues (TEB), $ millions 1,455 1,381 Domestic Banking Solid revenue growth 1,471 967 980 920 242 255 282 219 233 209 Q1/06 Q4/06 Retail & Small Business Q1/07 Q1/07 vs. Q1/06 revenues: up 7% Retail & Small Business: up 6% Strong asset and deposit growth - mortgages up $13 billion or 17% - personal deposits up $5 billion or 7% - business deposits up $5 billion or 15% Lower margin Wealth Management: up 17% ■ Increased mutual fund and retail brokerage revenues Q1/07 vs. Q4/06 revenues: up 1% ■ Average assets up 1%, deposits up 2% ☐ Other income up 4% from broad-based growth ■Wealth Management ■Commercial Banking/Other Scotiabank ◉ 17 Domestic Update on 2007 priorities Drive sustainable revenue growth > greater emphasis on investment products net mutual fund sales exceeded $1 billion for the first four months versus net redemptions last year market share growth in personal term deposits - up 52 bp yr/yr Expand distribution and sales capacity > plan to open 35 new branches (opened 15 in 2006) - opened 5 new branches during Q1/07 > plan to add 300+ new sales staff - added 50 Financial Advisors in branches Improve earnings momentum 18#10Scotiabank Scotiabank International Banking Rob Pitfield Executive Vice President International Banking 19 International Banking Changing Regional Mix Q1/07 Net Income $316MM Q1/06 Net Income $233MM - $62MM 19% $147MM $107MM 47% 34% $81MM $139MM 35% 59% $13MM 6% Mexico Caribbean & Central America Latin America, Asia & Other 20#11Scotiabank 233 Net Income* ($ millions) 268 International Banking 316 Q1/06 Q4/06 Q1/07 * available to common shareholders Robust Growth Q1/07 vs. Q1/06 net income: up 36% ■ Revenues up 30% from positive impact of acquisitions in Peru, Caribbean & Central America combined with strong organic growth Expenses up 24%, or 5% excluding acquisitions - higher costs related to the opening of 53 Mexican branches in past year and ongoing business growth initiatives partly offset by lower litigation expenses ■ Lower loan losses due to large provision taken in Q1/06 against commercial loan in Asia Higher tax rate due to increased earnings from higher tax jurisdictions Q1/07 vs. Q4/06 net income: up 18% ■ Revenues up 8% on broad-based loan growth and positive impact of acquisitions Expenses up 1%, or down 2% excluding acquisitions Higher loan losses due to increases in the Caribbean from low levels in Q4/06 21 International Banking Higher revenues in Mexico, C&CA Scotiabank revenues (TEB), $ millions 967 895 744 339 303 303 312 387 349 243 241 129 Q1/06 Q4/06 Q1/07 Mexico Caribbean & Central America Latin America & Asia Q1/07 vs. Q1/06 revenues: up 30% ■ Mexico revenues up 12% on strong asset growth, higher brokerage, trust and credit card fees ■ Caribbean & Central America revenues up 24% driven by: • acquisitions in Costa Rica and Dominican Republic strong organic loan growth, particularly in Puerto Rico, Bahamas, T&T ▪ Latin America & Asia up 86% due to Peru acquisitions Q1/07 vs. Q4/06 revenues: up 8% " Mexico up 12% on volume growth, positive f/x impact ■ Caribbean & Central America up 11% on asset growth, full quarter of Interfin acquisition, positive f/x impact ■ Latin America & Asia revenues down 1% as Q4/06 included gain on sale of a foreclosed asset in Asia 22#12Scotiabank International Update on 2007 priorities ■ Drive sustainable revenue growth > Pursue additional acquisition opportunities • • increase presence in existing markets - $US 94 million for 10% stake in First BanCorp (Puerto Rico) target complementary businesses: insurance & wealth management - acquisition of 68% of Dehring Bunting & Golding in Jamaica Aggressively expand distribution network > add 125 new branches (85 in Mexico) & 100 ABMs • opened 17 new branches ต Scotiabank Continue double-digit earnings growth 23 Scotia Capital Stephen McDonald Co-Head Scotia Capital 24#13Scotiabank 258 Q1/06 Scotia Capital Record quarter Net Income* ($ millions) 294 Q1/07 vs. Q1/06 net income: up 14% Revenues up 2%, higher lending volumes partly offset by lower trading compared to record Q1/06 Expenses up 2% due to higher compensation and technology costs ■ Increased loan loss recoveries mainly in the U.S. 235 Q4/06 Q1/07 * available to common shareholders Q1/07 vs. Q4/06 net income: up 25% ■ Revenues up 10% due to higher lending volumes, interest recoveries and increased trading revenues Expenses up 20% due to higher performance- based and other compensation ■Loan loss recoveries vs. provision in Q4/06, no new provisions in the quarter 25 Scotiabank Scotia Capital revenues - Strong loan volume growth, lower trading revenues (TEB), $ millions 630 620 575 331 370 307 299 250 268 Q1/06 Q4/06 Global Capital Markets (GCM) Q1/07 Global Corporate & Investment Banking (GC&IB) Q1/07 vs. Q1/06 revenues: up 2% Global Corporate & Investment Banking: up 20% Higher loan volumes: up 33% - Canada up $4 billion or 37% - U.S. up $3 billion or 38% - Europe up $700 million or 16% ■ Greater interest recoveries from impaired loans ■ Increased investment banking revenues Higher securities gains Global Capital Markets: down 11% Strong results in foreign exchange, precious metals More than offset by declines in trading, particularly derivatives & equity, from record results in Q1/06 Q1/07 vs. Q4/06 revenues: up 10% ■ Higher equity trading, foreign exchange and precious metals revenues ■ Increased interest recoveries O Partly offset by lower advisory fees, lower spreads 26#14Scotiabank Scotia Capital Update on 2007 priorities Enhance NAFTA platform with additional product capabilities - adding Global Transaction Banking capabilities Build additional global specializations - leverage Waterous & Co. acquisition to enhance cross-sell in Oil & Gas strong pipeline - - develop or acquiring expertise in targeted industries - hired mining team - increase business with alternative asset managers infrastructure has been developed Maintain strong credit discipline - business Deliver sustainable earnings growth with high ROE Scotiabank 27 Risk Review Brian Porter Chief Risk Officer 28#15Scotiabank $ millions Favourable credit conditions Change Yr/Yr Qtr/Qtr Provision for Credit 63 (12) 31 Losses (PCL) Specific Provisions 63 (12) (29) Net Impaired Loans* 579 (80) 9 General Allowance: $1,323 million -$16 million increase from Costa Rica acquisition $1.5 billion of credit protection in place * after specific allowance for credit losses Scotiabank 29 Credit losses remain moderate $ millions Domestic: - Retail Banking - Commercial 8 20 74 10 134 71 Change Yr/Yr Qtr/Qtr 13 International: - Mexico 4 (8) - Caribbean & Central America 10 8 - Latin America & Asia 5 (8) 19 (8) 11 336 2457 Scotia Capital: - U.S. - Canada & Other (29) (17) (46) (1) 3 (10) (30) (14) (56) Other Total Specific Provisions Reversal of General Allowance Total 63 (12) (29) - 60 63 (12) 31 30#16Scotiabank $ millions Domestic: Net impaired loan formations in Q1/07 - Retail 81 - Commercial 6 87 International: - Mexico 36 - Caribbean & 10 Central America 10 - Latin America & Asia 19 65 Scotia Capital: - U.S. - Canada & Other (33) (42) (75) Total 77 Domestic Retail: formations in line with strong volume growth; underlying credit trends remain strong Domestic Commercial: stable credit quality International: formations primarily in retail portfolios across the division. Overall credit quality trends remain stable. 31 Scotia Capital: sale of one account in the U.S., declassification of 2 accounts in Europe Formations down $92 million vs. Q4/06 Scotiabank $ millions Trend in net impaired loan formations by business line Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Domestic: Retail 106 73 Commercial (3) 44 20 103 117 96 628 76 77 81 29 106 87 International Retail 44 43 62 52 70 Commercial 38 (34) (31) (43) 82 9 21 27 65 GON 74 (9) Scotia Capital (78) (115) (98 36 (75) 107 11 19 169 77 32#17Scotiabank $ millions 20 10 0 Market risk well controlled November 1, 2006 to January 31, 2007 м Actual P&L 1 day VAR ww (10) (20) ■ Q1/07: Average 1 day VAR: $9.2 mm vs. $10.1 mm in Q4/06 ■ Q1/07: No loss days exceeded the 1 day VAR Scotiabank $ millions 33 Strong risk controls over hedge fund credit exposures Nature of Credit Exposure Jan 31/07 Prime Brokerage Secured lending transactions $485 Credit equivalent Derivatives amount related to capital markets trading $548 Short-term, secured Liquidity $31 loans Credit exposures subject to Board-approved limits 34#18Scotiabank Scotiabank Outlook Rick Waugh President & Chief Executive Officer 35 Strong start to 2007 ■ Billion dollar quarter, earnings up 20% vs. Q1/06 ☐ High ROE of 23% ■ Growth in all three business lines ☐ Strong organic asset and deposit growth, as well as growth in fee-based businesses ■ Positive contribution from acquisitions; continue to pursue acquisition opportunities ■ Well positioned to achieve 2007 performance objectives 36#19Scotiabank % 1.97 All Bank 1.97 Scotiabank Appendix 37 Net interest margin 1.98 1.89 1.91 Domestic 2.78 2.74 2.67 2.62 2.58 International 4.19 4.20 4.15 4.09 4.06 Scotia Capital All-Bank margin: +2 bps qtr/qtr higher margins in Group Treasury ■higher proportion of International assets Domestic margin: - 4 bps qtr/qtr ■primarily from strong mortgage growth at relatively narrower spreads, higher deposit rates International margin: - 11 bps qtr/qtr ■ narrower spreads in C&CA, Chile ■ partly offset by higher spreads in Mexico, Asia Scotia Capital margin: flat qtr/qtr tighter loan spreads offset by interest recoveries 0.73 0.76 0.72 0.71 0.71 ☐ Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 38#20Scotiabank Low variability of trading revenue trading revenue, Q1/07 # days 10 8 6 4 2 0 Scotiabank 0123456789 $ millions 10 11 Λ 16 98% days had positive results in Q1/07 vs. 95% in Q4/06 39 Strong capital ratios - despite growth in risk-weighted assets % of risk-weighted assets $ billions 10.8 10.2 10.4 10.0 10.2 197.0 206.8 190.3 180.1 168.9 9.0 8.5 8.4 8.3 8.4 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Tier 1 Tangible Common Equity (TCE) 40 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Loans & Acceptances Residential Mortgages Securities Cash, Other Assets & Off Balance Sheet#21Scotiabank $ millions High level of unrealized securities gains Q1/07 Q4/06 Q1/06 Emerging Market Debt 714 683 709 Fixed Income (127) (113) (57) Equities 574 521 543 1,161 1,091 1,195 41