#1Scotiabank Scotiabank Investor Presentation Fourth Quarter, 2003 December 2, 2003 1 Overview Peter Godsoe Chairman 2#2Scotiabank 2003 - performance highlights Q4/03 Results (vs. Q4/02) ◉ EPS: $1.26-up 15.6% ROE: 18.6% vs. 16.5% Provision for credit losses: $120mm vs. $429mm 2003 Results (vs. 2002 ex. Argentina) EPS: $4.69 up 7.8% ROE: 17.6% vs. 16.6% Provision for credit losses: $893mm vs. $1,575mm Capital Ratios Tier 1: 10.8% TCE: 8.9% Dividend increase +6 cents to 50 cents/quarter 3 Significant improvement in Scotia Capital Scotiabank solid results in Domestic & International Net income, $ millions 1200 1,094 80* 1000 1,062 800 600 400 200 0 Domestic 540** 125 669 2002 2003 380 721 International Scotia Capital * after-tax gain on sale of merchant acquirer business charges related to Argentina 4#3Scotiabank ROE Met our performance targets 2003 Target 17.6% VS. 15-18% EPS Growth* 7.8% VS. 5-10% Productivity Tier 1 54.9% VS. <58% 10.8% VS. 8%+ excluding 2002 charges relating to Argentina Scotiabank 5 A record of consistent earnings growth Net income, $ millions 482 540 2,477 94 95 96 97 98 99 00 01 02* 03 60 * includes charges related to Argentina 6#4Scotiabank - A record of consistent dividend growth - two increases this year Annual dividend, cents/share 2003 increase: +16% $2.00* 200 180 160 140 120 100 00 80 60 60 58¢ 40 1994 1996 * based on current rate Scotiabank 1998 2000 2002 2004 7 Performance Review Sabi Marwah Senior Executive Vice-President & Chief Financial Officer 8#5Scotiabank $ millions Results negatively impacted by stronger Canadian dollar Q4/03 vs. Q4/03 vs. 2003 vs. Q3/03 Q4/02 2002 (30) (190) Total Revenue (550) 10 90 Expenses 270 (15) (65) Net income (160) (0.03) (0.13) EPS impact ($) (0.31) 9 Underlying revenue growth in 2003 Scotiabank $ millions (TEB) Reported Change 2003 2002 $ % 10,443 10,885 (442) (4) Impact of Stronger Canadian dollar 550 550 Sale of merchant acquirer business Sale of Quilmes/Argentine charges Underlying (10) (185) 175 19 (17) 36 11,002 10,683 319 3 Other Income 4,209 3,796 413 11 Net Interest Income 6,793 6,887 (94) (1) 10#6Higher underlying other income... Scotiabank Change Q4/03 vs. Q4/02 $ MM % Change 2003 vs. 2002 $ MM % (12) (1) Reported 73 2 60 Impact of stronger Canadian dollar 185 114 Sale of merchant acquirer business 175 (4) Sale of Quilmes/Argentine charges (20) 158 18 Underlying 413 11 Scotiabank 11 ...due to the following Change Q4/03 vs. Q4/02 Change 2003 vs. 2002 $ MM % $ MM % 158 18 Underlying 413 11 32 Investment Banking 128 20 Trading 91 10 10 Deposit & Payment services 65 4 Credit Fees 53 18 Card Revenues 36 76 Security Gains (19) (39) Securitization Revenues (22) 37 Other 81 158 18 413 11 12#7€ Scotiabank Lower margins Change Change Q4/03 vs. Q3/03 2003 vs. 2002 2.22% (6) bps Net interest margin 2.23% (11) bps Due to: 1 Funding margins (N.A./Europe) (5) Canadian $ margin (3) Trading 1 Other (8) (4) (3) 4 13 Higher expenses in 2003... 19 Scotiabank $ millions Change Q4/03 vs. Q4/02 $ MM % Change 2003 vs. 2002 $ MM % (68) (4) Reported (243) (4) 90 Impact of stronger Canadian dollar 270 237 Sale of Quilmes/Argentine charges 311 15 Sale of merchant acquirer business 54 (63) 211 Expense recoveries/tax settlement 15 Underlying (63) 329 6 14#8Scotiabank $ millions ...due to the following Change Q4/03 vs. Q4/02 $ MM % 211 15 Underlying Change 2003 vs. 2002 $ MM % 329 Stock & performance-based 95 114 compensation 4 Pension & post-employment benefits 42 25 Litigation 25 25 Technology 60 62 Other 88 211 15 329 6 15 Scotiabank 60 60 55 559 Maintaining productivity leadership expenses as % of revenues 50 50 99 00 16 54.9% ך 01 02 03#9Scotiabank Higher BaTS expense offset by lower preferred dividends $ millions Change Q4/03 vs. Q4/02 Change 2003 vs. 2002 Non-controlling interest 12 Issuance of BaTS securities (21) Inverlat Other (5) Total 58 (10) 16 64 (14) Preferred dividends* (53) * excluding redemption premium 9 Scotiabank 17 Very strong capital ratios % of risk-adjusted assets 12 10.8 10 9.9 9.3 Tier 1 8 8.9 8.3 6 7.8 Tangible Common + 2 T 0 2001 2002 18 2003 Equity#10Scotiabank $ millions Higher securities surplus Securities Surplus (Deficit) Q4/03 Q3/03 Q4/02 - Emerging Market Debt 512 477 219 - Fixed Income 27 27 (113) - Equities 164 155 (131) 703 659 (25) Scotiabank 19 Business Line Results 20 20#11Scotiabank Diversified earnings base % of net income, excluding Other 2003 Scotia Capital International 29% 27% 44% Domestic 21 Scotiabank Domestic - steady performance Net income, $ millions 347 ◉ Significant growth in retail products yr/yr - mortgages up 10% revolving credit up 17% core deposits up 16% 80* 272 264 ◉ Lower margin 267 Q4/02 Q3/03 Q4/03 Underlying other income up 22% yr/yr retail brokerage up 26% Expenses up $133mm yr/yr - technology initiatives - higher stock-based compensation mortgage acquisition costs Lower credit losses 22 after-tax gain on sale of merchant acquirer business#12Scotiabank Domestic-strong platform ■ Increased market share, yr/yr growth - Sept. 30/03 ↑ - Mortgages 22 bps - Savings & chequing deposits ↑ 69 bps Highest growth rate for fee-based assets among major brokerages ■ Achieved highest rating for overall customer service for fourth consecutive year ▪ Excellent employee morale Scotiabank 23 Scotia Capital - rising earnings Net income, $ millions 58 193 221 ◉ Major improvement in credit quality Q4/02 Q3/03 Q4/03 ☐ ◉ - provisions down $344mm yr/yr down $110mm qtr/qtr Revenue down 18% yr/yr stronger Canadian dollar decrease in corporate lending assets lower U.S. funding margins Expenses stable 24#13Scotiabank International results impacted by foreign currency translation Net income, $ millions 128 175 156 ■ Caribbean - - lower earnings yr/yr due to stronger Cdn $ local currency earnings up 14% yr/yr lower earnings vs. Q3 due to credit losses & timing of expenditures on initiatives ■ Latin America higher earnings yr/yr in Inverlat lower PDI revenues vs. Q3/03 Asia lower credit losses yr/yr Q4/02 Q3/03 Q4/03 25 Scotiabank Inverlat - growing contribution Scotiabank " Strong growth in assets and deposits yr/yr retail up 62%, commercial up 21% core deposits up 12% ■ Purchased US$350mm retail auto portfolio "Best Bank for 2003" - Latin Finance Purchase price equation: - goodwill - tax-loss carry forward 26#14寫 Scotiabank Risk Review Warren Walker Executive Vice-President Global Credit Risk Management 27 Scotiabank - Credit quality – continued improvement Specific provisions: down $80mm from Q4/03 vs. Q3/03 - down $1,136mm 2003 vs. 2002 ▪ Net impaired loans in Q4/03: $47mm - down $270mm* from Q3/03 - - down $573mm* from Q4/02 ■ Progress in Scotia Capital portfolios * includes $114mm transferred to other assets as a result of a new CICA standard on foreclosed assets 28#15Scotiabank $ millions Lower specific provisions... Q4/03 Q3/03 2003 2002 48 71 Domestic 272 282 58 21 International 137 69 Scotia Capital: 49 85 - U.S. 270 1,131 (27) 47 - Other 279 116 5 I Other (1) (23) 133 224 957 1,575 (13) (24) Argentina (64) 454 120 200 Total 893 2,029 29 Scotiabank ...with a downward trend specific provisions, $ millions 475* 325 275* 224* ☐ Other ■Scotia Capital 133* Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 excluding Argentina 30#16Scotiabank $ millions Minimal net formations in Q4/03 Scotia Capital - - Canada 89 - U.S. (45) - Europe/Asia (36) 8 Domestic 42 International 41 Transfer re foreclosed assets (114) Total (23) 31 9 Scotiabank $ millions 450 Positive trend in net formations 350 394 383 250 150 50 50 153 II. -50 50 -150 Q4/02 Q1/03 32 193 Other ■Scotia Capital re foreclosed assets 91 (114) Q2/03 Q3/03 Q4/03#17Grade Scotiabank Lower cable & telecom exposure Loans & acceptances, $ millions Sector Investment Non-Investment Grade Total Q4/03 Q3/03 Q4/03 Q3/03 Q4/03 Q3/03 Cable operators 131 256 1,441 1,580 1,572 1,836 Regulated telephone 420 612 113 142 533 754 Unregulated telephone 56 60 186 258 242 318 Wireless 172 204 501 654 673 858 Long-haul fibre cable 47 60 47 60 CLECS 50 76 50 76 Total 779 1,132 2,338 2,770 3,117 3,902 Gross Impaired Loans: $386mm, Net $300mm 33 5 Lower power & energy trading exposure Scotiabank Loans & acceptances, $ millions Sector Investment Non-Investment Grade Grade Total Q4/03 Q3/03 Q4/03 Q3/03 Q4/03 Q3/03 Regulated Utilities 542 551 494 565 1,036 1,116 Diversified Generation 25 24 338 585 363 609 Independent Power 437 476 272 340 709 816 Projects with PPAs* Other Power Projects 45 48 631 851 676 899 Total 1,049 1,099 1,735 2,341 2,784 3,440 Impaired Loans: Gross $294mm, Net $156mm * Power Purchase Agreements 34#18€ Scotiabank # days 10 Low variability of trading revenue... Trading revenue, Q4/03 6 8 7 6O 5 4 3 2 1 0 (4) (3) (2) (1) 01 2345678 9 Λ 14 $ millions 35 9 Scotiabank Risk summary ■ Significant improvement in Scotia Capital in 2003 ■ Domestic & International stable Expect lower credit losses in 2004 36#19寫 Scotiabank Scotiabank Outlook Rick Waugh Chief Executive Officer 37 Key issues ■ Credit quality - anticipate improvement ■ Capital management – maintain strength and flexibility · ■ Growth - 3 strong platforms - Domestic - Scotia Capital - International 38#20Scotiabank Domestic - expand customer base ■ Maintain and capitalize on leadership in customer satisfaction and loyalty - continue to increase share of customers' business - attract new customers – retail & commercial - ■ Grow Wealth Management business - leverage partnership with retail bank through referrals - improve service and performance ■ Continued focus on cost control 39 Scotiabank Scotia Capital - capitalize on long- established relationships Leverage top 3 position in Canada Expand reach of Global Trading Improve customer profitability - increase business with customers providing acceptable ROE - seek new areas of growth ■Credit quality - maintain disciplined approach to managing portfolios 40#215 International - leverage group strengths Scotiabank ■ Sales & Service - focus on sales and customer satisfaction aggressive product launches - leverage distribution network ■ Improve productivity - use best practices from Canada upgrade banking systems and processes ■ Expand in key markets Mexico - Spanish Caribbean and Central America (e.g. Dominican Republic, Costa Rica, El Salvador) 41 Scotiabank Deliver consistent earnings growth ■ 2004 targets - EPS growth: 10-15% ROE: 16-19% - productivity ratio - below 58% maintain strong capital ratios and credit ratings 42#22Scotiabank 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. These statements include comments with respect to our objectives, strategies, expected financial results (including those in the area of risk management), and our outlook for our businesses and for the Canadian, U.S. and global economies. 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, regulatory developments in Canada and elsewhere, technological developments, consolidation in the Canadian financial services sector, competition, judicial and regulatory proceedings, the possible impact of international conflicts and other developments including terrorist acts and the war on terrorism, 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, financial condition or liquidity. 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, 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. 43