#1Scotiabank Investor Presentation Third Quarter, 2008 August 26, 2008 Scotiabank Caution Regarding Forward-Looking Statements 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 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 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, including changes in laws; operational and reputational risks; the accuracy and completeness of information the Bank receives customers and counterparties; 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 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 Billion Dollar Quarter ■ Net income - $1 billion, EPS - $0.98 Strength of diversification each of our three growth platforms performed well record quarter for Domestic Banking, continued market share gains ■ Benefiting from strong risk management stable provisioning quarter over quarter ■ Continuing to pursue growth initiatives. - · E*TRADE Canada, Scotiabank Peru 4#3Scotiabank Scotiabank Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 5 Q3/08 Solid Quarter Change Q3/08 Qtr/Qtr Yr/Yr Net income ($ millions) $1,010 3% (2)% EPS $0.98 1% (4)% ROE 21.0% (40) bp (70) bp Productivity ratio 54.3% (50) bp 130 bp Quarter over quarter + continued asset growth + higher trading, investment banking + increased securities gains - higher funding costs - increased expenses - higher taxes - increase in preferred dividends 6#4Scotiabank Higher Revenues - Strong Asset Growth, Broad-based Fee Income Increases Revenues (TEB) 3,302 ($ millions) 3,477 3,272 1,428 1,389 1,299 1,913 1,973 2,049 Q3/07 Q2/08 Q3/08 Net Interest Income (TEB) ☐ Other Income Q3/08 vs. Q3/07 revenues: up 5% ■ net interest income up 7% + strong organic asset growth, particularly mortgages and corporate loans + acquisitions - lower net interest margin ■ other income up 3%: + broad-based gains in credit fees, securitization, cards, deposit & payment services, mutual funds - lower trading, mainly derivatives & forex vs. Q3/07 peak - lower securities gains Q3/08 vs. Q2/08 revenues: up 6% ■ net interest income up 4% + asset growth, longer quarter ■ other income up 10% + higher investment banking fees, including record Scotia Waterous + stronger trading, including derivatives + higher securities gains including IPO gain in Mexico 7 Scotiabank average balances, $ billions Asset Growth Continues 12% 457 409 111 96 45 + residential mortgages up 15% 40 116 + personal loans up 13% 90 97 96 86 Q3/07 89 Q3/08 Residential mortgages Personal loans ■Business & government (includes acceptances) Securities Other 8 + business & gov't loans up 29%#5Scotiabank Higher Expenses Acquisitions, Growth Initiatives Non-interest expenses ($ millions) 1,889 1,794 1,752 1,013 1,005 1,068 359 368 335 404 430 453 Q3/07 Q2/08 Q3/08 Salaries & employee benefits ■Premises & technology Q3/08 vs. Q3/07 expenses: up 8% - higher salaries, premises & technology, mainly due to acquisitions, branch expansion, other growth initiatives - higher advertising, rewards program costs + lower performance-based compensation + favourable forex impact Q3/08 vs. Q2/08 expenses: up 5% - higher salaries due to longer quarter - increased performance-based compensation in line with improved trading results - indemnity provision in Peru - higher stock-based compensation + lower professional fees Other Scotiabank 9 Strong Capital 9.8 9.6 Tier 1 9.3 TCE 7.2 7.5 7.6 Q4/07 Q2/08 Q3/08 Higher Tier 1 and TCE ratios (%) + strong internal capital generation + capital issuances + positive impact of Basel II in 2008 - risk-weighted asset growth 10#6Scotiabank Scotiabank Net Income* ($ millions) Domestic Banking Chris Hodgson Executive Vice-President Domestic Personal Banking 455 416 391 11 Domestic Banking Record Quarter Q3/08 vs. Q3/07 net income: up 16% + revenues up 9% + strong asset & deposit growth partly offset by lower margin + higher transaction & card revenues expenses up 2% growth initiatives, including acquisitions, partly offset by lower commission based compensation - increase in provisions due to portfolio growth, Scotia Dealer Advantage (SDA) & small business Q3/08 vs. Q2/08 net income: up 9% + revenues up 6% + net interest income +7%, other income +5% expenses up 3% volume related costs, stock based compensation, 2 extra days - Q3/07 Q2/08 Q3/08 *available to common shareholders 12#7Scotiabank Strong Asset Growth Driving Higher Revenues Revenues (TEB) ($ millions) 1,686 1,588 1,543 1,050 992 972 288 317 353 283 279 283 Q3/07 Q2/08 Q3/08 Retail & Small Business Commercial Banking/Other Wealth Management Q3/08 vs. Q3/07 revenues: up 9% Retail & Small Business + mortgages +15% & ScotiaLine +12% + term deposits +13%, chequing & savings +12% Commercial Banking + strong organic asset growth & fee income + positive impact of SDA Wealth Management + Direct Investing +20%, with positive impact of Trade Freedom + Mutual Funds +6%, despite market decline Q3/08 vs. Q2/08 revenues: up 6% + volume growth & lower funding rates + broad based growth in other income: higher credit fees, mutual fund, card & transaction revenues Scotiabank 13 Continued Strong Market Share Gains Qtr/Qtr Yr/Yr Residential Mortgages No change +6 bps * Personal Term Deposits +19 bps +106 bps * Total Personal Deposits +4 bps +68 bps * Mutual Funds +4 bps +28 bps *Acquisition of Dundee Bank contributed +15 bps to personal term deposits and +22 bps to total personal deposits Domestic market share figures as at June 2008 14#8Scotiabank • Scotiabank Domestic Update on 2008 Priorities Organic growth - expanding distribution network - increasing sales force Acquisitions and alliances - E*TRADE Canada Capitalize on market opportunities - strong capital to take advantage of changing environment 15 International Banking Rob Pitfield Executive Vice-President International Banking 16#9International Banking Scotiabank Solid Growth - Organic & Acquisitions Net Income* ($ millions) 326 321 270 Q3/07 Q2/08 Q3/08 * available to common shareholders Q3/08 vs. Q3/07 net income: up 19% + revenues up 30% + strong & diversified organic loan growth, acquisitions & $40MM IPO gain in Mexico expenses up 25% - acquisitions, growth initiative spending, $28MM indemnity provision in Peru higher tax rate in Mexico - increase in retail provisions due to asset growth, acquisitions & slight deterioration in Mexico Q3/08 vs. Q2/08 net income: down 2% + revenues up 7% + volume growth, IPO gain in Mexico & widespread transaction driven growth - expenses up 14% growth initiative spending, higher Q2 recoveries, indemnity provision lower provisions - reversal in Mexico Commercial, partly offset by retail provisions in Mexico & Peru Scotiabank 17 Broad-Based Revenue Growth Revenues (TEB) ($ millions) 1,236 1,153 382 953 323 322 410 440 406 420 414 225 Q3/07 Q2/08 Q3/08 Mexico Caribbean & Central America Latin America & Asia Q3/08 vs. Q3/07 revenues: up 30% Mexico + retail loan growth, higher margin + IPO gain, partly offset by lower trading Caribbean & Central America + strong retail & commercial loan growth ■ Latin America & Asia + Chile acquisition + strong organic loan growth, including Commercial in Asia Q3/08 vs. Q2/08 revenues: up 7% ■ Mexico + IPO gain, partly offset by lower trading + retail loan growth ■ Caribbean & Central America + continued asset growth, increased margin + higher transaction based revenues ■ Latin America & Asia + broad-based loan growth losses in trading & from MTM of securities 18#10€ Scotiabank Update on 2008 Priorities • Expanding distribution network added 22 branches in Q3 • • Scotiabank Increasing presence in Peru ― raised ownership in Scotiabank Peru to 98% (from 78%) - purchased Banco del Trabajo, making Scotiabank #1 in consumer finance - acquired 47.5% of Profuturo, Peru's 4th largest private pension fund Continued progress with segmentation strategy - leveraging Peru's consumer finance expertise to drive growth in Chile and other Latin American countries 19 Scotia Capital Steve McDonald Co-Head Scotia Capital 20#11Scotiabank Net Income* ($ millions) 291 276 251 Q3/07 Q2/08 Q3/08 *available to common shareholders Scotia Capital Excellent Quarter Q3/08 vs. Q3/07 net income: up 5% + revenues up 1% + higher corporate loan volumes & wider spreads + record fixed income & continued strength in forex & ScotiaMocatta - lower derivative trading revenues vs. record Q3/07 + expenses improved by 5% + lower performance-based compensation + ROE very strong at 34.1% Q3/08 vs. Q2/08 net income: up 16% + revenues up 21% + much stronger trading, with higher derivatives & record fixed income + higher corporate lending & investment banking, including record ScotiaWaterous revenues + Q2/08 loss on non-trading securities - expenses up 5% - higher performance-based compensation + other expenses well controlled 21 Scotiabank 644 Revenues: 2nd Best Quarter Since 2002 Revenues (TEB) ($ millions) 538 652 354 371 307 273 298 231 Q3/07 Q2/08 Global Capital Markets (GCM) Q3/08 Global Corporate & Investment Banking (GC&IB) Q3/08 vs. Q3/07 revenues: up 1% Global Corporate & Investment Banking + higher corporate loan volumes & wider spreads + higher credit fees Global Capital Markets - lower derivatives revenues versus record Q3/07 + largely offset by: + record quarter for fixed income trading + continued strong forex & precious metals trading Q3/08 vs. Q2/08 revenues: up 21% Well diversified growth + significantly higher trading revenues, particularly from derivatives & fixed income trading + higher credit fees + second best investment banking revenues ever, including record revenues in Scotia Waterous + Q2/08 loss on non-trading securities 22#12Scotiabank Scotiabank Scotia Capital Update on 2008 Priorities Executing on strategy to expand global sectoral focus: energy, infrastructure, mining, precious metals Scotia Waterous achieved record results new infrastructure team in Canada lead on major mining transactions ScotiaMocatta granted membership in Shanghai Gold exchange Leveraging NAFTA capabilities Maintaining prudent risk management 23 Risk Review Brian Porter Executive Vice-President & Chief Risk Officer 24#13Risk Overview Scotiabank Managing through challenging environment Stable provisioning quarter over quarter ■ Auto industry exposure manageable - GMAC program performing within expectations 25 Scotiabank Stable Provisioning Quarter-over-Quarter Specific provisions, $ millions Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Domestic: Retail 68 72 79 82 77 Commercial 27 6 12 20 77 78 91 102 99 728 22 International Retail 42 56 64 69 81 Commercial (17) (29) (34) (9) (25) 25 27 30 60 56 Scotia Capital (10) (10) (10) (9) 4 92 95 111 153 159 26#14Scotiabank Strong Relative PCL Performance 0.50% 0.40% Specific Provisions as % of Average Loans and Acceptances 0.32% 0.30% 0.26% 0.43% 0.44% 0.24% 0.23% 0.20% 0.18% 0.14% 0.13% 0.10% 0.00% 2006 2007 Q1/08 Q2/08 Q3/08 BNS 4 Cdn. Bank Peers 27 Scotiabank Higher Net Impaired Loan Formations Driven Primarily by 3 Accounts Q3/08, $ millions Domestic - Retail 115 - Commercial 15 130 International Retail 104 - Commercial 93 197 Scotia Capital - U.S. 79 - Canada & Other (29) 50 Total 377 Domestic Retail: formations reflect growing portfolio size; underlying credit trends remain strong Domestic Commercial: underlying credit quality stable International Retail: formations across division, largely reflects underlying growth and some increase in delinquencies International Commercial: classification of two accounts in the Caribbean and additional classifications in Chile, partially offset by declassifications in Mexico and the Caribbean Scotia Capital: classification of one account in the U.S., partially offset by loan sales in Canada and the U.S. 28#15Scotiabank Auto Industry Exposure Manageable $ billions Q4/06 Q4/07 Q3/08 North American & European Wholesale* Original Equipment Manufacturers (OEM) 0.2 0.2 0.5 Finance & Leasing 0.5 0.6 1.0 Parts Manufacturers 0.9 0.8 0.6 Dealers/Floorplan 2.3 2.4 2.7 3.9 4.0 4.8** Investment Grade 44% 48% 60% Loss Ratio (2006, 2007 & YTD 2008) 32bps 9bps Auto-backed securities (primarily GMAC) 6.3 6.2 7.1 Bank sponsored & third party conduits 9.0 10.2 8.2 * loans and acceptances ** represents 4% of Business & Government loans and acceptances 29 Scotiabank GMAC Program Performing Within Expectations High quality, well-structured notes: >90% AAA Underlying assets consumer loans - no leases ■ Enhancement from discounted purchase price - no credit exposure to GMAC ■ Credit enhancement for each subsequent purchase based on recent performance Increasing Canadian content Adequate cushion under current conditions 30#16Scotiabank Provisions Expected to Increase Moderately Over Medium Term Domestic Banking International Banking . organic growth in retail portfolio • growth in retail portfolio impact of U.S. slowdown in Mexico and the Caribbean • lower commercial recoveries in Mexico and Peru • impact of U.S. slowdown on certain industries Scotia Capital ⚫ lower reversals and recoveries Scotiabank 31 Outlook Rick Waugh President & Chief Executive Officer 32#17Scotiabank Outlook ■ Well positioned to meet market challenges ■ Continue to invest capital in growth initiatives: ■ - organic expansion - acquisitions Ongoing focus on risk and cost discipline 33 Scotiabank Appendix 34#18Business Line Performance Scotiabank net income available to common shareholders, $ millions Scotiabank 455 416 391 Q3/07 Q2/08 Q3/08 326 321 291 270 276 251 Domestic International Scotia Capital 35 Other Segment* net income available to common shareholders, $ millions 79 Q3/07 Q2/08 Q3/08 (35) (89) Q3/08 vs. Q3/07 net income + higher securitization revenues + lower expenses - higher cost for liquidity & - hedging of interest rate risk negative impact of financial instruments - lower securities gains Q3/08 vs. Q2/08 net income + positive impact of financial instruments + lower expenses - higher cost for liquidity & hedging interest rate risk - lower securities gains *includes Group Treasury and other corporate items, which are not allocated to a business line 36#19Scotiabank Impact of Forex Translation Impact ($MM) Yr/Yr Qtr/Qtr Revenues (79) 6 Non-interest expenses 21 (4) Net income (42) 1 Scotiabank Average exchange rate Q3/08 Q2/08 Q3/07 $US/$CAD 0.99 0.99 0.93 Mexican peso/$CAD 10.16 10.62 10.07 Peruvian new sol/$CAD 2.85 2.83 2.95 Chilean peso/$CAD 494.32 454.75 488.76 37 International Increased Diversification Q3/07 Revenue: $953MM Q3/08 Revenue: $1,236MM Other LA & Asia 6% Mexico 34% C&CA 43% Peru 13% Chile 4% +30% Other LA & Asia 10% 38 Mexico 31% C&CA 36% Peru 13% Chile 10%#20€ Scotiabank % 1.86 Increase in All-Bank Net Interest Margin All Bank 1.87 1.79 1.79 1.76 2.56 Domestic 2.49 2.52 2.35 2.33 International 4.32 4.27 4.18 4.14 4.10 0.59 Scotia Capital 0.96 0.69 0.66 0.60 All-Bank margin: +3 bps qtr/qtr Domestic margin: +3 bps qtr/qtr + lower funding rates International margin: +4 bps qtr/qtr + higher spreads in Mexico & Caribbean & Central America - lower margins in Peru Scotia Capital margin: +6 bps qtr/qtr + higher spreads in Canada & United States + lower trading assets Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Scotiabank 0.50% 0.40% 39 Relative NPL Performance Net Impaired Loans as % of Total Loans and Acceptances 0.39% 0.47% 0.36% 0.32% 0.30% 0.25%0.24% 0.25%0.26% 0.26% 0.20% 0.10% 0.00% Q3/07 Q4/07 Q1/08 BNS 4 Cdn. Bank Peers 40 Q2/08 Q3/08#21Scotiabank Relative Coverage Total Allowances as % of Loans and Acceptances 1.50% 1.03% 1.00% 0.93% 0.94% 0.92% 0.87% 0.71% 0.69% 0.72% 0.71% 0.50% 0.00% Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 BNS 4 Cdn. Bank Peers Specific Allowance as % of Gross Impaired Loans 100% 80% 66% 61% 63% 58% 60% 53% 42% 40% 20% 38% 33% 30% 0% Q3/07 Q4/07 Q1/08 41 Q2/08 Q3/08 Scotiabank Average 1 day VaR, $ millions VaR by Risk Factor Q3/08 Q2/08 Q3/07 Risk Factor Interest rate 13.0 12.8 9.0 Equities 3.5 3.0 8.7 Foreign exchange 0.9 1.3 2.0 Commodities 3.0 3.6 1.3 Diversification (4.6) (6.1) (5.4) All-Bank VaR 15.8 14.6 15.6 42#22Scotiabank # days 10 2 8 6 Scotiabank ($ millions) 30 20 10 0 (10) (20) Trading Revenue Q3/08 Trading Revenue ($ millions) (9) (8) (7) (6) (5) (4) (3) (2) (1) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ■83% days had positive results in Q3/08 vs. 67% in Q2/08 43 Trading Results Within 1 Day VaR May 1, 2008 to July 31, 2008 - Actual P&L 44 1 day VaR