#1€ Scotiabank Scotiabank Investor Presentation Third Quarter 2001 1 Overview of Q3/01 Results Peter Godsoe Chairman & C.E.O. 2#2€ Q3/01 Performance Highlights Scotiabank ■ Continued earnings momentum ◉ ➤ EPS up 12%* year/year ➤ ROE 17.3% Strong top-line revenue growth ➤ up 13% year/year ◉ Sharp drop in net impaired loans ➤ down $301 million in Q3 to $395 million ➤ continued asset sales ■ $75 million addition to general provision in Q3 ➤ general provision = 0.91% of risk-assets Strong capital ratios and reserves ➤ Tier 1 9.1% = adjusted for one-time gains in Q3/00 3 5 Record of consistent earnings growth Scotiabank Net Income, $ millions 18% CAGR 554 539 495 497 510 465 416 397 402 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00* Q4/00 Q1/01 Q2/01 Q3/01 * excludes gains on sale of stock transfer business & Solidbank ($53MM) 4#3€ Second dividend increase this year Scotiabank 120 100 Annual dividend, cents/share 80 60 60 60 40 40 20 20 38¢ 1988 24% increase over 2000 $1.24 1990 1992 1994 1996 1998 2000 2001 5 € Scotiabank On track vs. targets ROE Q3/01 2001 YTD Target 17.3% 17.4% VS. 16-18% EPS Growth 12%* 16%* VS. 12-15% Productivity 55.4% 53.7% VS. <60% Tier 1 9.1% 9.1% VS. 7.5%+ I adjusted for one-time gains in Q3/00 6#4€ Scotiabank Performance Review Sabi Marwah Executive Vice-President & Chief Financial Officer 7 € Solid earnings in Q3 Scotiabank Reported net income Includes: Addition to general provision ($75MM pre-tax) $MM EPS ($) $554 $1.04 (44) (0.09) Tax settlement-refund interest ($82MM pre-tax) Tax refund 48 0.10 Deferred tax asset reduction 15 0.03 (14) (0.03) $5 $0.01 8#5ོ Scotiabank $ millions Good growth in net income Reported net income Q3/00 gains on sale of stock transfer business and Solidbank 9 Q3/01 Q3/00 % increase 554 548 1% (53) 554 495 12% Scotiabank Continued strong top-line revenue growth $ millions (TEB) Q3/Q3 revenues up 13% 2,738 2,598 2,427 2,437 2,298 2,309 * 2,066 1,979 2,024 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00* Q4/00 Q1/01 Q2/01 Q3/01 I gains on sale of stock transfer business & Solidbank ($82MM) 10#6€ Scotiabank ...driven by higher margins Increase Q3/01 vs. Q2/01 vs. Q3/00 Net interest margin 2.43% +9 bps +6 bps Increase due to: Inverlat Lower funding costs Non-accrual loans 73 152 Securities income Other 2 9 bps 2 - (5) 1 6 bps 11 ...and broad-based growth in other income Scotiabank Change $ millions Reported Q3/01 Q3/00 1,054 $ % 990 64 6% Inverlat (66) (66) Tax settlement - refund interest (82) (82) Net gain on investment securities (5) (94) 89 Gain on sale of stock transfer business/Solidbank (82) 901 814 88 82 87 11% ■ Comprised of: Trading & other investment banking Underwriting & other commissions Deposit & payment services Credit fees Retail & discount brokerage Other 63 51 34 44 23 15 (16) (10) (15) (18) (2) (1) 87 11% 12#7€ Scotiabank Base expenses relatively flat Change in expenses Less: - Inverlat - performance-related (mainly SARS*) - initial computer outsourcing costs - sale of stock transfer business/ Quebec branches Change in base expenses * Stock appreciation rights € Scotiabank 60 60 55 99 50 50 Q3/01 vs. Q2/01 Q3/00 $MM % $MM % $124 8.9% $208 15.9% 13 186 14.2 83 6.0 49 3.7 15 1.1 15 1.2 (58) (4.4) $26 1.8% $16 1.2% Productivity running at 55% expenses as % of revenues 58.6 55.4 T Q1/00 Q2/00 Q3/00* Q4/00 Q1/01 Q2/01 Q3/01 adjusted for one-time gains 14#8€ Scotiabank Scotiabank Improved capital ratios % of risk-adjusted assets 12.1 12.7 Total 9.1 8.5 Tier 1 7.2 Common 7.9 Q3/00 Q3/01 15 Continuing strong reserves $ billions Govt/Corp bonds 0.3 Equities 0.2 Emerging Mkt. Bonds 0.2 2.1 0.7 2.2 Marketable 0.7 Securities Q3/00 16 1.5 General Provision Q3/01#9€ Scotiabank € Scotiabank Domestic Business Line Results 17 Strength of Diversification - Higher International in 2001 YTD 2000 YTD 2001 International 25% 43% 32% International Domestic 19% 44% 37% Scotia Capital 18 Scotia Capital#10€ Scotiabank Domestic Solid earnings Net income, $ millions - 234 223 44* 212 Q3/00 Q2/01 Q3/01 * gain on sale of stock transfer business ■ Interest profit up $32MM yr/yr ➤ strong growth in retail assets: +$3B Lower brokerage fees - 19 Expenses down $56MM yr/yr ➤ savings from programs/ network realignments ➤ sale of businesses Higher commercial credit losses qtr/qtr 5 Steady performance from Scotia Capital Scotiabank Net income, $ millions 211 198 ■ Revenue up 8% yr/yr 192 ➤ record global trading +41% record underwriting +44% ➤ lending -9% Expenses up $41MM ➤ mostly higher performance- related compensation ■ Credit losses stable qtr/qtr Q3/00 Q2/01 Q3/01 20 20#11€ Growing International contribution Scotiabank Net income, $ millions 104 9* Q3/00 149 132 Q2/01 * gain on sale of Solidbank € Scotiabank ■ Net income up 27% yr/yr ➤ higher revenues in Caribbean ➤ strong contribution from Latin America ➤ Inverlat: $21MM in Q3/01, $17MM in Q2/01 Expenses up 14% qtr/qtr ➤ Mostly SARS Q3/01 21 Risk Review John Crean Senior Executive Vice-President Global Risk Management 22 22#12€ Scotiabank Risk Overview ■ Lower net impaired loans: $395 million at July 31 ➤ down $301 million from Q2/01 ➤ continued loan sales ■ Higher general provision ◉ ➤ added $75 million in Q3/01 Improved coverage ratio ➤ 91% vs. 85% in Q2/01 23 Scotiabank $ millions Further impaired loan sales in Q3/01 Scotia Capital Domestic International Net formations - loan sales (214) - new formations 103 (111) 40 24 154 83 83#13€ Scotiabank On track to meet Q4/01 net impaired loan target Net impaired loans, $ billions 1.2 1.1 1.0 0.8 0.6 0.4 0.2 0.7 2001 Forecast 0.4 0.25 00 0.0 Q1/01 Q2/01 Q3/01 Q4/01 25 € Scotiabank Forecast of specific provisions $ millions 400 400 300 200 100 Forecast 250 250 225-250 0 Q1/01 Q2/01 Q3/01 Q4/01 26#14€ Scotiabank Lower telecom & cable exposure Loans & acceptances, $ millions, July 31, 2001 Investment Sector Grade Non-Investment Grade Total Total U.S. Exposure Cable Operators 347 1,133 1,480 577 Regulated Telephone 885 885 Unregulated 460 1,318 1,778 964 telephone/wireless Other communications 15 422 437 360 Total 1,707 2,873 4,580 1,901 Of which CLECS 211 149 Total exposure down $200 million from Q2/01 Net impaired loans: $125 million 27 € Scotiabank Moderate trading risk maintained $ millions, May 1, 2001 to July 31, 2001 20 15 10 5 -5 -10 -15 Actual P&L VaR 1 day -20 28#15€ Scotiabank € Scotiabank Outlook Peter Godsoe Chairman & C.E.O. 20 29 Outlook ■ Economic slowdown ➤ pickup not expected until 2002 Closely managing credit portfolios ■ Solid balance sheet ➤ strong capital & reserves ■ Solid earnings momentum ➤ benefiting from diversification ➤ on track to meet targets 30#16€ Scotiabank This presentation includes forward-looking statements about objectives, strategies, and expected financial results. Such forward-looking statements are inherently subject to risks and uncertainties beyond the Bank's control, including but not limited to economic and financial conditions globally, regulatory developments in Canada and elsewhere, technological developments, and competition. These and other factors may cause the Bank's actual performance to differ materially from that contemplated by forward-looking statements, and the reader is cautioned not to place undue reliance on such forward-looking statements. 31