#1Scotiabank Scotiabank Investor Presentation Third Quarter, 2003 1 Third Quarter Overview Peter Godsoe Chairman & Chief Executive Officer 2#2Scotiabank Performance highlights Strong growth in earnings ➤ EPS of $1.20 - up 14% from Q3/02 ➤ ROE: 17.7% vs. 16.2% Earnings well diversified across business lines ■ Credit quality continues to stabilize ➤ Net impaired loans: $317 million; down $61 million from Q2/03 ➤ Specific provisions: $200 million; down $48 million from Q2/03 Stronger capital ratios ➤ Tier 1: 10.6% ➤ Tangible Common Equity (TCE): 8.7% Scotiabank 3 Upward earnings trend EPS (diluted), $ 1.05 1.09 1.11 1.12 1.20 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 4#3€ Earnings well diversified Scotiabank International 9 Scotiabank ROE Scotia Capital 30% 27% 43% 5 Domestic On track to meet 2003 targets Q3/03 YTD/03 Target 17.7% 17.2% VS. 15-18% EPS Growth* 14% 5% VS. 5-10% Productivity 55.1% 54.0% VS. <58% Tier 1 10.6% 10.6% VS. 8%+ excluding 2002 charges relating to Argentina 6#4€ Scotiabank Scotiabank $ millions Performance Review Sabi Marwah Senior Executive Vice-President & Chief Financial Officer 7 Argentina - minimal impact Pre-tax After-tax Release of specific provisions 24 15 Write-down of bonds (27) (17) (3) (2) 8#5€ Scotiabank Margin up slightly from Q2 Q3/03 vs. Q2/03 vs. Q3/02 Net interest margin 2.28% 3 bps (5) bps Funding (N.A. & Europe) Other 9 2 (5) 1 3 bps (5) bps Scotiabank Broad-based growth in other income Change Q3/03 vs. Q2/03 $ millions $ % 44 5 Reported 26 Securities gains Change Q3/03 vs. Q3/02 $ |ཙ % 37 13 1 Effect of sales of Argentine operations 77 30 & merchant acquirer business 70 8 Underlying 120 14 18 10 Deposit, payment & cards 22 12 13 9 Investment, brokerage & trust (7) (4) 10 6 Credit fees 9 5 16 6 Investment banking 57 24 23 100+ Securitization revenue 8 23 (10) (9) Other 31 44 10#6Scotiabank Expenses well controlled $ millions Change Q3/03 vs. Q2/03 Change Q3/03 vs. Q3/02 $ % 24 2 Reported $ 58 % (31) Settlement with Quilmes creditors I Effect of sales of Argentine operations & merchant acquirer business 28 86 6 55 4 40 Stock & performance-based compensation 85 15 1 Base expenses 1 11 Scotiabank 62 Continued productivity leadership expenses as % of revenues 58 54 54.0% 50 50 98 99 00 01 02 YTD/03 12#7Scotiabank Stronger capital ratios % of risk-weighted assets 10 10.6 10.3 Tier 1 9.8 8 6 4 2 O Scotiabank 8.7 8.4 8.0 Tangible Common Equity Q3/02 Q2/03 Q3/03 13 Substantially higher securities surplus $ millions Q3/03 Q2/03 Q3/02 Securities Surplus (Deficit) - Emerging Market Debt 477 432 58 - Fixed Income 27 8 (18) - Equities 155 (22) (166) 659 418 (126) 14#8寫 Scotiabank Business Line Results 15 Scotiabank net income, All business lines up from Q2/03 millions 300 272 264 250 200 150 T T 100 50 T Q2/03 Q3/03 193 169 171 175 0 Domestic Scotia Capital International 16#9Scotiabank Domestic another good quarter - net income, $ millions 272 262 264 Q3/02 Q2/03 Q3/03 ■ Continued strong growth in retail products yr/yr ➤ residential mortgages up 8% ➤ revolving credit up 19% ➤ core deposits up 13% ■ Some margin compression ☐ Very good credit quality 17 Scotiabank Scotia Capital – near record earnings net income, $ millions 56 193 169 Q3/02 Q2/03 Q3/03 ■ Credit quality stabilizing ➤ provisions down $220 million yr/yr ➤ provisions down $39 million qtr/qtr ■ Non-interest revenue up 16% yr/yr ➤ record underwriting fees and foreign exchange ☐ Narrower funding margins Lending assets down 23% yr/yr 18#10Scotiabank International - solid underlying earnings net income, $ millions 212 171 175 Q3/02 Q2/03 Q3/03 ■ Q3 results impacted by stronger Canadian dollar ■ Caribbean ➤ net income up 17% qtr/qtr ■ Latin America ➤ Inverlat higher earnings ➤ lower emerging market bond revenues ■ Asia ➤ lower net income yr/yr due to fluctuation in credit losses 19 Scotiabank Inverlat - increased contribution Scotiabank ■ Inverlat contribution up 80% vs. Q2/03 ➤ BNS share of earnings = 80% (equal to 91% ownership for 2 months) Strong growth in assets & deposits yr/yr ➤ retail loans up 37% ➤ commercial loans up 13% ➤ core deposits up 14% 20#11寫 Scotiabank Risk Review Warren Walker Executive Vice-President Global Credit Risk Management 21 5 Credit quality continued improvement Scotiabank ■ Lower net impaired loans: $317 million ➤ down $61 million from Q2/03 ➤ down $702 million from Q3/02 ■ Lower specific provisions: $200 million ➤ down $48 million from Q2/03 ➤ down $200 million from Q3/02 ■ U.S. portfolio continues to stabilize ➤ restructurings in Power sector largely completed 22#125 Net impaired loan formations by business Scotiabank $ millions, Q3/03 Scotia Capital - Canada (1) - U.S. 46 - Europe/Asia 31 76 Domestic International Total 67 50 193 23 Scotiabank Net impaired loans trending down net impaired loan formations, $ millions 1,019 1050 □ Other Scotia Capital 900 750 600 450 383 394 300 193 153 150 0 Q3/02 Q4/02 Q1/03 24 Q2/03 Q3/03#13S Scotiabank Decrease in specific provisions specific provisions, $ millions 475* 400 Q3/02 325 275* 224* Other Q4/02 Q1/03 *excluding Argentina 25 Q2/03 Q3/03 Scotia Capital 5 Lower power & energy trading exposure Scotiabank Loans & acceptances, C$ millions Sector Investment Grade Non-Investment Grade Total Q3/03 Q2/03 Q3/03 Q2/03 Q3/03 Q2/03 Regulated Utilities 551 665 565 630 1,116 1,295 Diversified Generation 24 585 777 609 777 Independent Power 476 439 340 389 816 828 Projects with PPAs* Other Power Projects 48 150 851 829 899 979 Total 1,099 1,254 2,341 2,625 3,440 3,879 Impaired Loans: Gross $291mm, Net $141mm Power Purchase Agreements 26#14Scotiabank # days 14 Consistent trading performance 90% + days = positive 12 10 8 6 4 2 0 (13) (4) (3) (2) (1) 0 1 2 3456 7 8 9 10 11 $ millions 27 9 Scotiabank Modest market risk $ millions, May 1, 2003 to July 31, 2003 20 10 -10 -20 Average 1 day VaR = $9.0 28 Actual P&L VaR 1 day ww#15€ Scotiabank Risk summary ■ Good credit quality in Domestic & International ■ Scotia Capital: U.S. portfolio stabilizing Expect lower provisions in 2004 Scotiabank 29 Outlook Peter Godsoe Chairman & Chief Executive Officer 30#16寫 Scotiabank Outlook ■ Positive trend in credit quality ☐ Strength from earnings diversification ➤ increased contribution from Inverlat Strong capital provides flexibility ➤ business opportunities ➤ dividend increases and stock buybacks Firmly on track to meet 2003 performance targets 31 9 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. 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, 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. These and other factors may cause the Bank's actual performance to differ materially from that contemplated by forward-looking statements. 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. 32