#1Scotiabank Investor Presentation First Quarter, 2010 March 9, 2010 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; 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 2009 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 Q1 2010 Overview Strong Quarter - EPS up 14% vs. Q1/09 Strong ROE - 17.4% in Q1/10 Industry-leading credit performance Record revenues . Expenses remain well managed Strong capital position - Tier 1 from 10.7% to 11.2% Scotiabank 4#3Scotiabank Financial Review Luc Vanneste Executive Vice-President & Chief Financial Officer Strong Quarter Q1/10 Q4/09 Q1/10 vs. Q4/09 Q1/09 Q1/10 vs. Q1/09 988 902 10% Net Income ($MM) 842 17% $0.91 $0.83 10% EPS 17.4% 16.4% 1.0% ROE $0.80 14% 16.2% 1.2% 50.5% 54.2% (3.7)% Productivity Ratio Year-over-year earnings comparison Q1 earnings benefited from... • Higher net interest margin • Strong trading & wealth mgmt. • Significantly lower writedowns Scotiabank Partly offset by... 58.7% (8.2)% ⚫Significantly higher tax rate: $55MM writedown of future tax assets ⚫Negative impact of forex Modest increase in specific provisions 6#4Record Revenues Revenues (TEB) ($ millions) 3,808 3,981 3,421 1,759 1,636 1,385 2,036 2,172 2,222 Q1/09 Q4/09 Q1/10 Other Income Net Interest Income (TEB) Scotiabank Q1/10 vs. Q4/09 Revenues + Net interest income up 2% + Retail asset growth, wider spreads in Canadian retail + Positive impact of financial instruments (FI) + Other income up 8% + Higher trading revenues & net securities gains + Positive impact of FI - Lower credit & underwriting fees vs. exceptional Q4 $32MM writedown of investment in Venezuelan affiliate Q1/10 vs. Q1/09 Revenues + Net interest income up 9% + Asset re-pricing, higher retail assets + Positive impact from FI Negative impact of FX, lower corporate loan volumes + Other income up 27% + Lower AFS securities writedowns + Strong trading & mutual fund revenues Lower securitization & non-trading FX revenues - Negative impact of FX 7 Disciplined Expense Management Non-Interest Expenses ($ millions) 2,010 2,064 2,009 1,130 1,097 1,187 388 394 573 492 " 371 ◉ 451 451 Q1/10 vs. Q4/09 Expenses Expenses down 3% from seasonally high Q4/09 + Seasonal declines in advertising, professional fees & technology expenses + Lower legal provisions + $23MM relating to VISA rewards points in Q4/09 - Higher salaries & benefits, largely due to higher stock-based compensation Q1/10 vs. Q1/09 Expenses Expenses flat with Q1/09 + Positive impact of FX + Lower technology expenses & business taxes - Higher stock-based compensation Q1/09 Q4/09 Q1/10 Salaries & employee benefits Premises & technology Other Scotiabank 8#5Strong Capital Ratios 11.2 TCE (%) 10.4 10.7 Tier 1 (%) 9.5 9.6 8.8 8.2 7.9 7.2 7.2 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Capital • Continue to grow capital ratios Strong internal capital generation • Strong DRIP participation • Scotiabank Decrease in RWA Actively participating in discussions on proposed capital rules 9 Canadian Banking: Another Record Quarter 438 Net Income ($ millions) 503 560 Q1/09 Q4/09 Q1/10 Q1/10 vs. Q4/09 + Revenues up 2% + Volume growth, stable margin + Stronger commercial banking revenues + PCLs down $10MM + Expenses down 3% + $23MM relating to VISA rewards points in Q4/09| + Lower discretionary costs Q1/10 vs. Q1/09 + Revenues up 13% + 17bps increase in margin, retail volume growth + Stronger wealth management revenues PCLs up $25MM Expenses up 3% - Higher wealth management commissions & stock-based compensation Growth initiative spending Scotiabank 10#6International Banking: Earning Through Challenges 388 - Net Income ($ millions) 283 294 Q1/09 Q4/09 Q1/10 - Q1/10 vs. Q4/09 Revenues up 10% + Positive impact of FI & higher securities gains - Writedown on investment in Venezuelan affiliate PCLs up $10MM, significantly higher tax rate + Expenses down 5% + Release of legal provision in Peru + Lower advertising & professional fees Q1/10 vs. Q1/09 + Revenues down 3%, up 8% ex. FX - + Positive impact of FI & acquisitions + Higher securities gains, widespread transaction driven growth - $32MM writedown on investment in Venezuelan affiliate PCLs up $61MM, significantly higher tax rate + Expenses down 9%, down 1% ex. FX + Release of legal provision in Peru Scotiabank - Higher stock based compensation Scotia Capital: Strong & Diversified Revenues, Lower Loan Losses Net Income ($ millions) 353 300 381 Q1/09 Q4/09 Q1/10 Q1/10 vs. Q4/09 Revenues down 1% Strong credit fees, but down vs. record Q4 + Higher trading revenues + PCLs down $49MM Expenses up 8% - Higher performance-based compensation, salaries & technology costs + Lower legal provisions Q1/10 vs. Q1/09 + Revenues up 28% - +2nd best trading quarter ever + Higher loan origination & credit fees + Wider spreads Reduced loan volumes PCLs up $4MM Expenses up 6% Higher performance-based compensation Scotiabank 11 12#7Other Segment (1) ($ millions) Funding Net Interest Income Broker Deposits (2) Q1/10 Q4/09 Q1/09 (114) (106) (92) -- (49) (18) Net Securitization Revenues (3) (135) (139) 2 AFS Securities Writedowns (36) (49) (224) Financial Instruments 17 28 (111) Expenses & Net Other Items 21 27 27 Taxes (Excl. TEB Offset) 55 51 132 Sub-Total (192) (237) (284) Ontario Tax Writedown Total Other (55) (247) -- -- (237) (284) (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 (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 Scotiabank Risk Review Brian Porter Group Head, Risk & Treasury 13#8Q1/10 Risk Overview • Risk in credit portfolios continues to be well managed ($ millions) Q1/10 Q4/09 Q1/09 Net Impaired Loan Formations Specific Provisions 511 627 778 372 424 281 • Strong coverage ratios Q1/10 Q4/09 Q1/09 Earnings coverage of PCL (1) 5.1x 4.0x 4.8x Total Allowance as a % of GIL 71% 73% 91% Total Allowance as a % of Loans & BAS 1.06% 1.03% 0.86% (1) Pre-tax, pre-provision income to total PCL Scotiabank Net Impaired Loan Formations Moderating 15 ($ millions) Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Canadian Retail 218 246 167 205 184 Canadian Commercial 31 98 67 24 42 249 344 234 229 226 International Retail 336 264 276 254 259 International Commercial 133 93 232 5 135 469 357 508 259 394 Scotia Capital 60 303 161 139 (109) Total 778 1,004 903 627 511 Scotiabank 16#9Decline in Specific Provisions Quarter-over-Quarter ($ millions) Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Canadian Retail 122 126 137 159 140 Canadian Commercial 33 52 33 33 41 155 178 170 192 181 International Retail 130 125 146 122 130 International Commercial (14) (10) 33 45 47 116 115 179 167 177 Scotia Capital 10 109 117 65 14 Total 281 402 466 424 372 PCL ratio (bps) 36 54 64 63 55 5 Scotiabank 17 Provisions: Consistently Outperforming Canadian Peers Specific PCL as a % of Average Loans & BAS (basis points) 100 80 60 40 40 20 20 0 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Scotiabank Q2/09 Q3/09 Q4/09 Q1/10 - Scotiabank 4 Cdn. Bank Peers 18#102010 Risk Outlook • Asset quality remains strong - Retail portfolios performing as expected Corporate portfolios performing better than expected 2010 provisions - - Retail provisions likely to stay at somewhat elevated levels Overall, provisions appear to have crested Scotiabank Scotiabank Canadian Banking 2010 Outlook Chris Hodgson Group Head, Canadian Banking 19#11Canadian Banking: 2010 Outlook • Record quarterly NIAT . • - #1 in mutual fund net sales & market share gains among the banks - #1 in mortgage market share gains among the banks PCLs stable Expenses well managed • 2010 growth opportunities - Wealth Management, Insurance & Commercial Banking Scotiabank Scotiabank International Banking 2010 Outlook Rob Pitfield Group Head, International Banking 21#12International Banking: 2010 Outlook • Asset and revenue growth as economies rebound Continue to prudently manage risk • Disciplined expense management • Seeking opportunistic acquisitions Scotiabank Scotiabank Scotia Capital 2010 Outlook Mike Durland Group Head, Global Capital Markets & Co-CEO, Scotia Capital 23#13Scotia Capital: 2010 Outlook • Portfolio continues to perform well • Loan volumes contracting • Loan loss provisions were better than expected but not certain to remain at this level • Capital markets normalizing Scotiabank Scotiabank Appendix 25#14Stable Net Interest Margin (%) 1.76 1.74 1.76 1.71 1.52 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q1 margin benefited from... • Wider spreads on retail assets in Canadian Banking Offset by... • Increase in low yielding DWBs • Positive impact of FI • Decrease in non-earning assets Scotiabank 27 22 Canadian Banking: Higher Margin, Wealth Management Revenues Revenues (TEB) ($ millions) 1,886 1,921 1,702 1,199 1,192 1,034 391 365 408 277 322 321 Q1/09 Q4/09 Retail & Small Business Q1/10 Q1/10 vs. Q4/09 Revenues + Increased Commercial Banking revenues due to: + Lower write-down on securities + Increased credit fees + Higher spreads Q1/10 vs. Q1/09 Revenues Retail & Small Business + Higher margin + Increased assets & deposits Commercial Banking + Higher credit fees - Lower asset levels, decrease in margin Wealth Management + Higher mutual fund fees due to strong net sales, increased asset values & CI + Stronger full service brokerage & Private Client Group revenues Commercial Banking Wealth Management Scotiabank 28#15Canadian Banking: Volume Growth Average Balances ($ billions) Q1/10 Q4/09 Q1/09 Y/Y Q/Q Residential Mortgages (1) 125.1 122.9 118.2 6.9 2.2 Personal Loans 37.6 36.9 33.0 4.6 0.7 Credit Cards (2) 9.3 9.3 9.1 0.2 . Non-Personal Loans & 24.0 23.6 26.3 (2.3) 0.4 Acceptances Personal Deposits (3) 104.3 93.5 91.4 12.9 10.8 Non-Personal Deposits 58.4 54.1 48.8 9.6 4.3 Wealth Mgmt. AUA (Spot) 141.6 136.8 115.7 25.9 4.8 (1) Before securitization (2) Includes ScotiaLine VISA (3) Effective November 1, 2009, $10 billion of broker sourced deposits were transferred from the Other segment into Canadian Banking. Scotiabank Canadian Banking: Market Share 29 Market Share (%) 1 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Residential Mortgages 19.94 20.02 20.06 20.14 20.23 Total Personal Lending 17.84 17.94 17.85 17.90 18.29 Total Personal Deposits 11.25 11.26 11.12 10.91 10.85 Mutual Funds 7.61 7.63 7.93 8.35 8.84 (1) Market share statistics are issued on a one-month lag basis. (Q1 10: December 2009) Total Personal Lending market share is based on a comparison with the big six banks. Total Personal Deposits market share is based on a comparison with the total industry. Mutual Funds market share is based on a comparison with total banks. Sources: Mutual Funds - IFIC; Personal Lending and Personal Deposits - Bank of Canada Scotiabank 30#16International Banking: Solid Underlying Revenues Revenues (TEB) ($ millions) 1,418 1,374 1,252 359 336 298 522 480 424 537 530 558 Q1/09 Q4/09 Mexico Q1/10 Caribbean & Central America Latin America & Asia ■ Up 10% ■ Mexico Q1/10 vs. Q4/09 Revenues + Higher trading revenues & mutual fund fees + Gain from sale of pension business ■ Caribbean & Central America + Higher spreads & positive impact of Fl + Securities gains ■ Latin America & Asia + Positive impact of FI & higher credit fees - Writedown on investment in Venezuelan affiliate Q1/10 vs. Q1/09 Revenues ■ Down 3%, up 8% excluding FX (impacted all regions) ■ Mexico - Lower treasury gains + Gain from sale of pension business ■ Caribbean & Central America - Lower retail & commercial loan volumes + Higher spreads ■ Latin America & Asia + Higher securities gains - $32MM writedown on investment in Venezuelan affiliate Scotiabank 31 Scotia Capital: Diversified Revenue Strength Revenues (TEB) ($ millions) 910 900 704 443 503 308 396 467 397 Q1/09 Q4/09 Q1/10 Global Capital Markets Global Corporate & Investment Banking Scotiabank - - Q1/10 vs. Q4/09 Revenues Global Capital Markets + Higher derivatives & precious metals revenues Lower revenues from institutional equity Global Corporate & Investment Banking Lower credit fees vs. record in Q4/09 Decreased loan volumes & advisory fees + MTM gains on investments Q1/10 vs. Q1/09 Revenues Global Capital Markets +2nd best trading quarter ever + Significantly stronger derivatives revenues, partly due to derivative trading losses in Q1/09 Lower fixed income & FX revenues Global Corporate & Investment Banking + Wider spreads, higher credit & loan origination fees & MTM gains on investments Reduced loan volumes, lower investment banking revenues 32#17Economic Outlook in Key Markets Real GDP (Annual % Change) 2010E 2009F 2008 2000-07 Avg. Mexico 4.2 (6.5) 1.3 2.9 Peru 4.2 1.4 9.8 5.1 Chile 5.0 (1.5) 3.2 4.4 Jamaica (0.5) (4.0) (1.0) 1.5 Trinidad & Tobago 2.5 (2.5) 2.3 8.2 Costa Rica 1.8 (1.5) 2.9 4.7 Dominican Republic 3.2 2.5 5.3 5.4 Thailand 4.0 (2.3) 2.9 4.9 2010E 2009F 2008 2000-07 Avg. Canada 2.7 (2.4) 0.4 2.9 U.S. 3.1 (2.5) 0.4 2.6 Source: Scotia Economics, as of March 8th Scotiabank 33 Unrealized Securities Gains ($ millions) Emerging Market Debt Other Debt Equities Net Fair Value of Derivative Instruments and Other Hedge Amounts Total Scotiabank Q1/10 Q4/09 383 461 672 512 190 40 1,245 1,013 (217) (185) 1,028 828 34#18Trend in PCL Ratios (Specific PCL as % average of loans & BAs) Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Canadian Banking Retail 0.30 0.32 0.33 0.37 0.32 Commercial 0.50 0.83 0.52 0.55 0.68 Total 0.33 0.39 0.36 0.40 0.37 International Banking Retail 2.26 2.17 2.59 2.30 2.41 Commercial (0.12) (0.09) 0.32 0.48 0.50 Total 0.68 0.69 1.13 1.13 1.19 Scotia Capital Corporate Banking 0.07 0.80 1.01 0.65 0.15 All Bank 0.36 0.54 0.64 0.63 0.55 Scotiabank Trend in Specific Provisions ($ millions) 500 400 300 200 100 0 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Specific PCLS - Specific PCLS as a % of Avg. Loans & BAs Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Scotiabank 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% 36 35#19Trend in Net Impaired Loan Formations ($ millions) 1,200 1,000 800 00 600 400 200 0 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Scotiabank Trend in Gross Impaired Loans ($ millions) 5,000 4,000 3,000 2,000 1,000 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Gross Impaired Loans Q3/08 Q4/08 Q1/09 Q2/09 GILS as a % of Loans & BAS Scotiabank Q3/09 Q4/09 Q1/10 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 38 37#20Canadian Retail: Loans and Provisions (balances at Q1/10, $ billions) 126 Total = $170B -- 92% secured 23 12 9 Mortgages(1) % secured 100% Lines of Credit 70% Personal Loans 96% Credit Cards(2) 36% PCL Q1/10 Q4/09 Q1/10 Q4/09 Q1/10 Q4/09 Q1/10 Q4/09 $ millions 1 (4) (3) 26 36 60 65 51 60 % of avg. loans (bps) <1bp N/A 45 63 204 229 221 258 (1) Before securitizations of $17 billion & mortgages converted to MBS of $20 billion; 52% insured; LTV in mid-50s for uninsured portfolio (2) Includes $6 billion of Scotialine VISA (3) Recovery of provisions for mortgages reflects lower than expected write-offs Scotiabank International Retail: Loans and Provisions (balances at Q1/10, $ billions) 9.8 Total Portfolio = $21.5B 2.8 76% secured 0.8 Personal Loans (total = $6.7B) Credit Cards (total = $ 1.8B) Mortgages (total = $ 13.0B) 4.9 1.2 4.4 42 +0.4 1.5 6.2 - 0.1 2.4 3.3 1.2 2.8 0.5 0.7 C&CA (1) % of total 48% Mexico 24% Chile Peru 18% 10% PCL Q1/10 Q4/09 Q1/10 Q4/09 Q1/10 Q4/09 Q1/10 Q4/09 $ millions 35 31 48 38 22 14 25 38 % of avg. 140 121 403 306 205 136 426 657 loans (bps) (1) Caribbean and Central America Scotiabank 39 40#21International Commercial: Lending Portfolio Q1/10 = $33 billion Peru • Well secured Other 7% 10% Asia/Pacific -(10 countries) 27% Mexico 11% Chile 18% Caribbean & -Central America 27% Portfolios in Asia/Pacific and Peru are performing well Closely monitoring portfolios in Mexico and Caribbean & Central America Scotiabank International Commercial: Lending Portfolio Q1/10 = $33 billion Well secured Holding Companies 2% Hotels & Gaming Financial Services 7% 9% Communications & Media 5% Automotive 3% Agrifoods & Consumer 16% Transportation 9% Real Estate 12% Good diversification Closely monitoring Caribbean hotel exposures Scotiabank Industrial Products 5% Infrastructure, Privatization & Power 14% Other 18% 41 42#22Trading Results Within One-Day VaR 40 30 20 10 0 (10) (20) (30) (40) Scotiabank Trading Revenue 7 CO 6 5 (# days) 3 2 F O ul. (3) Q1/10 Trading Revenue -Actual P&L 1-Day VaR Average 1-Day VaR Q1/10: $14.6MM Q4/09: $15.0MM (2) (1) 0 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 ($ millions) Scotiabank ■ 87% of days had positive results in Q1/10 43 44