#1Scotiabank Investor Presentation Second Quarter, 2008 May 27, 2008 Scotiabank 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; the effect of changes in monetary policy; legislative and regulatory developments in Canada and elsewhere, including changes in tax laws; operational and reputational risks; 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 and success in managing the risks implied by the foregoing. 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 Q2/08 Results Solid Quarter Change Q2/08 Yr/Yr Qtr/Qtr Net income ($ millions) $980 (6)% 18% EPS $0.97 (6)% 18% ROE 21.4% (100) bp 310 bp Productivity ratio 54.8% 100 bp (170) bp + solid asset growth + minimal write-downs 4 - lower loan loss recoveries - higher expenses#3Scotiabank Solid Core Results Each Business Up Quarter Over Quarter net income available to common shareholders, $ millions Q2/07 Q1/08 Q2/08 416 364 367 326 318 293 282 187 Imm Domestic International 251 Scotia Capital Year over year Domestic: Continued strong asset growth, market share gains, good expense control partly offset by higher loan loss provisions, margin compression International: Strong organic asset growth, contribution from acquisitions (Chile & Thailand), partly offset by higher loan loss provisions, negative forex impact Scotia Capital: Strong asset growth, lower expenses offset by lower loan loss and interest recoveries, loss on non-trading securities, lower capital markets revenues Scotiabank 5 Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 6#4Scotiabank 1,039 Net Income ($ millions) Financial Performance Overview 980 835 Q2/07 Q1/08 Q2/08 Q2/08 vs. Q2/07 net income: down 6% ■ revenues up 2%: + net interest income up 4% - other income down 1% ■ expenses up 4% specific provisions up $108 million - lower recoveries in Scotia Capital, higher provisions in Domestic & International Q2/08 vs. Q1/08 net income: up 18% ■ revenues up 11%, or 2% excluding securities write-downs last quarter expenses up 7% provisions up $42 million - largely due to lower commercial recoveries in International 7 Scotiabank Higher Revenues - Strong Asset Growth, Lower Capital Markets Revenues Revenues (TEB) ($ millions) 3,211 3,272 2,957 1,308 1,299 1,025 1,903 1,932 1,973 Q2/07 Q1/08 Q2/08 Net Interest Income (TEB) ☐ Other Income Q2/08 vs. Q2/07 revenues: up 2% ■ net interest income up 4% driven by: + continued strong organic asset growth + acquisitions - lower net interest margin ■ other income down marginally: - lower capital markets related revenues (trading, investment banking, retail brokerage) & lower gains on non-trading securities + higher credit fees, mutual fund fees, securitization & insurance revenues Q2/08 vs. Q1/08 revenues: up 11% ■ net interest income up 2% + full quarter of Chile acquisition, favourable forex impact ■ other income up 27% +higher securities write-downs in Q1 + stronger trading revenues, including record precious metals trading results + higher securitization revenues 8#5Scotiabank average balances, $ billions Asset Growth Continues 404 13% 455 106 33 93 44 40 111 89 98 104 78 Q2/07 96 Q2/08 Residential mortgages Personal loans ■Business & government (includes acceptances) Securities Other 9 + residential mortgages up 14% + personal loans up 11% + business & gov't loans up 25% Scotiabank Higher Expenses Investing in Growth Platforms Non-interest expenses ($ millions) 1,794 1,726 1,669 1,005 1,004 978 359 329 327 393 430 364 Q2/07 Q1/08 Q2/08 Q2/08 vs. Q2/07 expenses: up 4% + higher salaries, higher premises & technology due to branch expansion, acquisitions + higher professional fees - lower performance-based compensation - favourable forex impact Q2/08 vs. Q1/08 expenses: up 7% + higher performance based compensation in line with improved trading results + full quarter of Chile acquisition + higher advertising & professional fees + unfavourable forex impact - lower stock-based compensation Salaries & employee benefits ■Premises & technology Other 10#6Scotiabank Strong Capital 11.7% Total Capital 10.2% 9.6% Tier 1 9.0% TCE 7.2% 7.5% Scotiabank Q1/08 Q2/08 Strong internal capital generated $0.8 billion year-to-date Capital raised year-to-date: • $ 0.6 billion preferred shares ⚫ $2.2 billion subordinated debentures Higher capital ratios: + internal capital generation + impact of Basel II + capital issuances 11 Domestic Banking Chris Hodgson Executive Vice-President Domestic Personal Banking 12#7Scotiabank Net Income* ($ millions) 416 364 367 Q2/07 Q1/08 Q2/08 Domestic Banking Excellent Quarter Q2/08 vs. Q2/07 net income: up 14% + revenues up 8% • strong asset & deposit growth partly offset by margin compression expenses up 2% growth initiative spending, including acquisitions & hiring client facing staff, partly offset by lower performance driven compensation increase in Retail provisions • portfolio growth including Scotia Dealer Advantage (SDA) underlying loss ratios continue to be good. higher Commercial provisions due to recoveries in Q2/07 Q2/08 vs. Q1/08 net income: up 13% + revenues up 5% strong asset growth & lower funding costs ▪ expenses were flat . increased growth initiative spending & seasonal expenses offset by shorter quarter & lower stock based compensation *available to common shareholders - higher provisions relate to 2 commercial accounts & SDA 13 Scotiabank 1,472 Domestic Banking Strong Asset Growth Driving Revenue Revenues (TEB) ($ millions) 1,588 1,510 992 932 933 Q2/08 vs. Q2/07 revenues: up 8% Retail & Small Business + mortgages +16% & deposits +12% lower margin due to asset mix & increased wholesale funding requirements Commercial Banking + strong asset growth + higher margin due to lower funding costs Wealth Management + Mutual Funds +12% 252 282 317 288 295 279 Q2/07 Q1/08 Q2/08 Retail & Small Business Commercial Banking Wealth Management Q2/08 vs. Q1/08 revenues: up 5% + strong asset growth: +3% + higher margin due to lower funding costs lower wealth mgmt. revenues due mostly to Dundee Wealth annual performance fees in Q1 14#8Scotiabank Strong Market Share Gains Year-over-Year Increase +17 basis points Residential Mortgages Personal Term Deposits +103 basis points* Total Personal Deposits +63 basis points* Mutual Funds +26 basis points *Acquisition of Dundee Bank contributed +15 basis points to personal term deposits and +22 basis points to total personal deposits Domestic market share figures as at March 2008 Scotiabank ☐ 15 Domestic Update on 2008 Priorities Drive sustainable revenue growth • Acquire new customers - Opened 4 new branches in Q2, plan to open 15 in 2008 • • • - - · Added front line staff in retail & small business Continue to develop strategic alliances with NHL, Cineplex/SCENE & Western Union Launch new initiatives - Launched "Bank the Rest" savings program - Introduced Scotia Gold Passport for business VISA card Enhance technology & infrastructure - Upgrade branch technology platform - Invest in ATMS & CHIP Focus on wealth management - Launch of advisory series of funds and Scotia Climate Change Fund - Growth of mutual fund wholesaler team initiated for advisor series Adding front line sales staff and investing in technology 16#9Scotiabank International Banking Rob Pitfield Executive Vice-President International Banking 17 Scotiabank International Banking Growth Continues - Organic & Acquisitions Net Income* ($ millions) 326 293 282 Q2/07 Q1/08 Q2/08 * available to common shareholders Q2/08 vs. Q2/07 net income: up 11% - + revenues up 18% strong broad-based loan growth, acquisitions, higher securities gains • significantly offset by forex expenses up 7% acquisitions, business growth initiatives (e.g. new branches), offset by forex higher tax rate in Mexico higher retail provisions, primarily in Mexico Q2/08 vs. Q1/08 net income: up 16% + revenues up 11% strong broad-based loan & deposit growth, acquisitions, positive forex and fair value write-downs in Q1 expenses up 8% unfavourable forex impact, acquisitions, higher Q1 recoveries in Latin America higher provisions largely due to lower commercial recoveries & reversals 18#10Scotiabank Revenues (TEB) ($ millions) International Banking Strong Revenue Growth 1,153 1,040 979 323 322 341 410 398 403 420 320 235 Q2/07 Q1/08 Q2/08 Mexico ■Caribbean & Central America Latin America & Asia Q2/08 vs. Q2/07 revenues: up 18% (forex negatively affected each segment) ■ Mexico + strong retail loan & deposit growth + higher insurance & mutual fund revenues ■ Caribbean & Central America + strong loan growth & improved margin ■ Latin America & Asia + Chile & Thailand acquisitions + strong net interest income growth - retail & commercial + higher non-trading securities gains Q2/08 vs. Q1/08 revenues: up 11% ■ Mexico + good retail loan growth - largely offset by lower commercial fees ■ Caribbean & Central America + continued asset growth: organic & acquisitions + improved margin ▪ Latin America & Asia + full quarter of Chile acquisition (1 month in Q1) + fair value write-downs in Q1 19 Scotiabank International Update on 2008 Priorities ■ Drive sustainable revenue growth Broader geographic diversification Segmentation strategy progressing well Distribution channel expansion on track • Will add 90-100 branches ■ Additional acquisitions Peru: Increased presence in fast growing market • • Raised ownership in Scotiabank Peru to 98% (from 78%) Acquisition of Banco de Trabajo makes Scotiabank #1 in consumer finance Expanded footprint in Guatemala and Dominican Republic Improving operational efficiency - Upgrading call centres and internet platforms 20#11Scotiabank Scotia Capital Michael Durland Co-Head Scotia Capital 21 Scotiabank Scotia Capital Good Quarter - Despite Tough Environment Net Income* ($ millions) 318 251 Q2/08 vs. Q2/07 net income: down 21% - revenues 18% lower - high level of interest recoveries in Q2/07 - lower trading revenues due to tougher environment + higher loan volumes & spreads + expenses improved by 7% + lower performance based compensation lower loan loss recoveries vs. high level in Q2/07 187 Q2/07 Q1/08 Q2/08 Q2/08 vs. Q1/08 net income: up 34% + revenues up 33% + great product diversification in trading - expenses up 27% - higher performance based compensation + other expenses well controlled ■ loan losses flat vs. last quarter *available to common shareholders 22#12Scotiabank 656 Scotia Capital Improving Revenue Across Several Businesses Revenues (TEB) ($ millions) 538 322 405 307 151 334 254 231 Q2/07 Q1/08 Q2/08 Q2/08 vs. Q2/07 revenues: down 18% Down from Q2/07 peak: lower derivatives & fixed income trading high level of interest recoveries in Q2/07 loss on non-trading securities + partly offset by record precious metals trading & very strong foreign exchange trading + higher corporate loan volumes & wider spreads Q2/08 vs. Q1/08 revenues: up 33% Well diversified growth: + record quarter for precious metals trading + higher loan volumes & spreads + higher investment banking revenues loss on non-trading securities Global Capital Markets (GCM) Global Corporate & Investment Banking (GC&IB) Scotiabank 23 Scotia Capital Update on 2008 Priorities Drive sustainable revenue growth Leverage NAFTA capabilities Increasing contribution from Scotia Capital Mexico Cross-border transactions involving US, Mexico and other geographies (e.g.: Dominican Republic) Expand client coverage globally in energy & mining and other industries where we have an advantage • Majority of Scotia Waterous business is now outside of Canada ScotiaMocatta: global leader in precious metals trading Adding new buy side clients Added 50 new corporate lending clients so far in 2008 Capitalize on market opportunities & conditions Maintain prudent risk management 24#13Scotiabank Scotiabank Risk Review Brian Porter Executive Vice-President & Chief Risk Officer 25 Risk Overview ■ relatively stable credit conditions decrease in VaR - market risk well controlled update on areas of current focus - exposures reduced and very manageable 26#14Scotiabank $ millions Trend in Specific Provisions Domestic: Retail Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 68 68 72 Commercial 28 (2) 66 27 77 78 288 6 91 225 79 82 12 20 102 International Retail 42 Commercial (12) (17) 30 Scotia Capital (51) (10) 45 $སྐྱེས €⌘ ¥S8 €8 64 69 (29) (34) (9) 30 60 (10) (10) (9) 111 153 Scotiabank 27 Trend in Net Impaired Loans Net Impaired Loans 845 ($ millions) 148 impact of recent 689 acquisitions in Chile, 51 579 584 601 Guatemala & Dominican Republic 377 341 360 329 357 244 291 215 208 229 35 53 29 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Scotia Capital Domestic ■International 28#15Scotiabank Average 1 day VaR, $ millions VaR by Risk Factor Risk Factor Q2/08 Q1/08 Q2/07 Interest rate 12.8 13.8 7.2 Equities 3.0 4.5 5.2 Foreign exchange 1.3 0.9 1.2 Commodities 3.6 2.7 1.5 Diversification (6.1) (5.3) (3.8) All-Bank VaR 14.6 16.6 11.3 Scotiabank # days 8 9 2 29 Trading Revenue Q2/08 Trading Revenue* ($ millions) (14) (13) (12) (11) (10) (9) (8) (7) (6) (5) (4) (3) (2) (1) 0 1 2 3 4 5 6 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 ■ 67% days had positive results in Q2/08 vs. 79% in Q1/08 * excludes amounts related to counterparty exposure write-downs 30#16Scotiabank Areas of Current Focus Montreal Accord ABCP CDOs and CLOS Monolines Secured Retail Auto Loans (GMAC) Hedge Fund Exposure Auction Rate Securities fair value of holdings: $144 million, unchanged from Q1/08 drawn liquidity lines to conduits: $44 million fair value of holdings: $1.2 billion (Q1/08: $1.4 billion) virtually all investment grade equivalent - nominal U.S. sub-prime exposure replaced credit default protection previously provided by a monoline other direct exposures not significant (<$50 million) indirect exposure: US$3.2 billion (Q1/08: US$4.4 billion) high quality of underlying assets, minimal exposure (<$50 million) to sub-prime mortgages exposure: $5.9 billion - internally modelled to investment grade (97% investment grade) now have ability to diversify some of the U.S. exposure to the Canadian market portfolio performing as expected majority of activity collateralized no credit issues with counterparties no exposure Scotiabank 31 Outlook credit quality to remain fairly stable for second half of 2008 . do not foresee significant change in loan losses from current levels expect loan loss provisions to increase gradually over medium term impact of acquisitions, organic growth and change in mix of loan portfolios . lower reversals and recoveries 32#17Scotiabank Outlook Rick Waugh President & Chief Executive Officer 33 Scotiabank Outlook Stronger Second Half ■ Continuing to invest in growth initiatives . • organic expansion acquisitions ■ On track to meet three of four key targets ◉ unlikely to meet full year EPS growth target Expect stronger second half • benefit from recent asset growth • improving market conditions . • stable Canadian dollar 34#18Scotiabank Scotiabank Appendix 35 Impact of Forex Translation Impact ($MM) Yr/Yr Qtr/Qtr Revenues (154) 49 Non-interest expenses 63 (20) Net income (67) 21 Average exchange rate Q2/08 Q1/08 Q2/07 $US/$CAD 0.99 1.01 0.86 Mexican peso/$CAD 10.62 10.99 9.63 Peruvian new sol/$CAD 2.83 Chilean peso/$CAD 454.75 3.02 497.76 2.78 467.07 36#19€ Scotiabank % 1.93 All Bank Small Decline in All-Bank Net Interest Margin 1.86 1.87 1.79 1,76 2.58 2.56 4.03 Domestic 2.35 2.33 International 4.27 0.79 0.59 4.32 4.18 2.49 4.10 Scotia Capital 0.96 0.69 0.60 All-Bank margin: -3 bps qtr/qtr Domestic margin: +14 bps qtr/qtr + lower wholesale funding costs + wider prime-BA spread + higher mortgage spreads International margin: -8 bps qtr/qtr - higher growth in lower spread assets in Asia slightly lower margins in Latin America +higher spreads in Caribbean & Central America Scotia Capital margin: -9 bps qtr/qtr - lower interest income in Global Capital Markets - higher trading assets + higher spreads in Canada, US Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Scotiabank 37 Scotiabank Mexico Improved Contribution in Q2 ($ millions) Q2/08 Q1/08 Q/Q Comments Contribution $96 $117 $(21) • Continued retail asset growth (Mexican GAAP) Canadian GAAP adjustments $(17) $(49) $32 Contribution to BNS $79 $68 $11 38 • More than offset by higher local taxes • Q2/08 includes reversal of locally booked VISA and bond gains Q1/08 includes: - write-down of future tax asset, and - reversal of local tax benefit#20Scotiabank International Increased Diversification Q2/07 Revenue: $979MM Q2/08 Revenue: $1,153MM Other LA & Asia 8% Scotiabank Mexico 35% C&CA 42% Peru 12% +18% Chile 3% 39 Other LA & Asia 13% C&CA 35% Mexico 28% Earnings in Other Segment* net income available to common shareholders, $ millions 53 Q2/07 Q1/08 Q2/08 (22) (35) *includes Group Treasury and other corporate items, which are not allocated to a business line Peru 13% Chile 11% Q2/08 vs. Q2/07 net income + higher securitization revenues negative impact of financial instruments - higher wholesale funding costs - higher expenses - reversal of general allowance in Q2/07 Q2/08 vs. Q1/08 net income + write-downs in non-trading securities in Q1 + higher securitization revenues - + lower losses from financial instruments lower funding profits from declining short term rates higher expenses 40#21Scotiabank Moderate Net Impaired Loan Formations (Q2/08, $ millions) Domestic - Retail 114 - Commercial 40 154 International - Mexico - Caribbean & Central America - Latin America & Asia 45 47 77 13 Domestic Retail: formations reflect growing portfolio size; underlying credit trends remain strong Domestic Commercial: classification of two accounts; underlying credit quality stable International: formations primarily in retail portfolios across division, largely 135 mirroring underlying asset growth; classifications of some commercial accounts Scotia Capital - Canada (18) - U.S. & Other (8) (26) Total 263 41 Scotia Capital: sale of accounts in Canada & the U.S. classified in Q1/08 Scotiabank ($ millions) Trading Results Within 1 Day VaR February 1, 2008 to April 30, 2008 -Actual P&L* 25 15 5 (5) (15) (25) ■ Q2/08 - Average 1 day VaR: $14.6 vs. $16.6 in Q1/08 * excludes amounts related to counterparty exposure write-downs. 42 1 day VaR#22Scotiabank ($ millions) Unrealized Securities Gains* Q2/08 Q1/08 Q2/07 Emerging Market Debt 493 547 676 Q/Q decline in unrealized Fixed Income (179) 89 (33) gains on fixed income primarily due to widening of credit spreads. Equities 257 259 565 571 895 1,208 *before related derivative and other hedge amounts 43