#1Scotiabank Scotiabank Investor Presentation Fourth Quarter, 2007 December 6, 2007 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 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 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 53 of the Bank's 2006 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" sections in this document are 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.#2Scotiabank Scotiabank Overview Rick Waugh President & Chief Executive Officer Achieved record earnings in 2007 EPS ($) 4.01 3.55 3.15 2.82 2.34 0.84 Dividends/Share ($) 1.50 1.32 1.10 2003 2004 2005 2006 1.74 2007 4 Results 2007 EPS: $4.01 - up 13% vs. 2006 Q4 EPS: $0.95 - up 7% vs. Q4/06 down 7% vs. Q3/07 Dividend Increase annual dividends up 16% ◉ +2 cents increase to $0.47/qtr#3All major business lines delivered strong earnings Scotiabank net income available to common shareholders, $ millions 21% 1,550 1,279 Domestic 2006 2007 17% 6% 1,232 1,114 1,054 1,047 International Scotia Capital Domestic: Record net income driven by strong asset and deposit growth partly offset by lower margin, primarily due to higher wholesale funding costs. Retail banking, wealth management, commercial banking, and small business all generated solid results. International: Record net income reflecting organic growth driven by strong asset growth across the division and the increased contribution from acquisitions, largely Peru and Costa Rica. Scotia Capital: Record net income with solid results from Corporate and Investment banking, both from lending and investment banking, and Global Capital Markets, from strong underlying trading results, notwithstanding losses on structured credit instruments. Scotiabank Delivered on 2007 key priorities Priorities Performance 1. Sustainable revenue growth 12% growth 2. Effectively manage capital 8 acquisitions: $2B+ Strong TCE: 7.2% 3. Leadership development Depth of talent 6#4Scotiabank Met or exceeded 2007 targets Q4/07 2007 Objective EPS Growth 7% 13% VS. 7-12% ROE 21.0% 22.0% VS. 20-23% Productivity 54.4% 53.7% VS. <58% Scotiabank 7 2008 Outlook ◉ Challenging operating environment ■ Continued focus on key priorities: Sustainable revenue growth - Effective capital management - Leadership development ■ Maintain positive targets and outlook 8#5Scotiabank Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer Scotiabank Group financial performance overview % Net income* -ROE 3,994 4,000 3,549 30 3,000 20 2,000 10 1,000 - 0 0 2006 2007 1,200 1,016 938 890 900 20 600 30 2007 vs. 2006 net income: +13% ■ record earnings and high ROE driven by: + strong asset growth + positive impact of acquisitions + favourable credit quality partially offset by: - some margin compression negative forex translation ($82) mm Q4/07 vs. Q3/07 net income: (8)% + VISA gains + widespread growth in retail volumes higher expenses partly due to acquisitions 300 0 Q4/06 Q3/07 10 - losses on structured credit instruments - lower underlying trading revenues 0 - higher expenses Q4/07 negative forex translation ($37) mm 10 * net income available to common shareholders, $ millions#6Scotiabank average assets, $ billions Strong asset growth 15% 403 409 409 Residential 351 mortgages 95 96- 101: 82 Personal loans 40 40 41 & credit cards 37 88 90 88 Business & 72 government (includes BA's) 198 97 Securities 88 72 82 Other 2006 Yr/Yr 2007 Residential mortgages: +16% Personal loans +9% Business & government: +23% Scotiabank % 1.89 11 86 87 Q3/07 Qtr/Qtr Q4/07 + residential mortgages +4% trading securities (10)% All-bank net interest margin flat quarter-over-quarter All Bank 1.93 1.91 1.86 1.87 All-Bank margin: +1 bps qtr/qtr +higher TEB interest income - negative impact of financial instruments Domestic 2.62 2.58 2.58 2.56 International 2.33 4.27 4.32 4.20 4.09 4.03 Scotia Capital 0.79 0.71 0.71 0.59 0.96 Domestic margin: (23) bps qtr/qtr - higher wholesale funding costs - shift in asset mix International margin: +5 bps qtr/qtr + broad based retail asset growth + growth in commercial assets in Asia Scotia Capital margin: +37 bps qtr/qtr + increase in tax exempt dividend income - reduction in low spread trading assets Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 12#7Scotiabank Strong revenue growth - up 12% vs. 2006 revenues (TEB), $ millions 13,021 11.648 7,629 6,848 5,392 4,800 2007 Net Interest Income (TEB) Other Income 3.302 3,294 2006 L 2,999 1,913 1,932 1,783 2007 vs. 2006 net interest income: +11% + strong organic and acquisition related retail asset growth margin compression due to higher funding costs & mix 2007 vs. 2006 other income: +12% ■broad based growth & positive impact of acquisitions + retail brokerage +$72 mm & mutual funds +$55 mm + net securities gains +$117 mm + investment banking revenues +$78 mm ■ negative forex translation ($80) mm Q4/07 vs. Q3/07 revenues flat ■ net interest revenue up 1%: + solid retail asset growth - negative forex translation ($46) mm ■ other income down 2%: + higher securities gains - lower underlying trading revenues 1,389 1,216 1,362 Q4/06 Q3/07 Q4/07 Scotiabank expenses, $ millions 6,994 6,443 - negative forex translation ($41) mm ■ VISA gain offset by losses on structured credit instruments 13 Investing for future growth 2007 vs. 2006 expenses: +9% ■ 40% of increase due to acquisitions ■ salaries & employee benefits +$215 mm: • ■ premises & technology +$139 mm: acquisitions & higher staffing for branch expansion • acquisitions, new branches & growth initiatives • higher advertising & professional fees ■ other expenses +$197 mm: 3,983 3,768 1,353 1,214 1,461 1,658 2006 2007 Salaries & employee benefits Premises & technology Other 1,708 1,752 • $51 mm VAT recovery in 2006 ■ forex translation ($77) mm Q4/07 vs. Q3/07 expenses: +2% 1,792 " 963 966 1,013 spending on revenue growth initiatives: • advertising & business development +$23 mm technology +$22 mm • professional fees +$28 mm • salaries +$11 mm 362 322 335 ■ lower performance based compensation ($42) mm " 420 404 467 pension & other benefits ($26) mm Q4/06 Q3/07 Q4/07 ■ forex translation ($30) mm 14#8Scotiabank Domestic International Positive operating leverage 2007 vs. 2006 Reported Adjusted* 6.0% 4.1% 4.7% 4.9% Scotia Capital (3.5)% 0.4% All Bank 3.2% 3.6% *Domestic: excl. VISA gain *International: excl. VISA gain and VAT recovery *Scotia Capital: excl. losses on structured credit instruments (including ABCP), gain on sale of bond index business ต Scotiabank 15 Domestic Banking Chris Hodgson Executive Vice President Domestic Personal Banking 16#9Domestic Banking Scotiabank Solid earnings from asset & revenue growth 1600 1,550 1,279 1200 800 400 450 300 150 0 2006 2007 Net Income* 391 335 434 2007 vs. 2006 net income: +21% + revenues up 9% - expenses up 3% • growth initiatives volume related expenses Q4/07 vs. Q3/07 net income: +11% + revenues up 5% (including VISA gain) - expenses up 4% reflecting growth initiatives: • acquisition related costs ⚫ new branches • higher advertising and technology costs Q4/06 Q3/07 Q4/07 * net income available to common shareholders, $ millions 17 Scotiabank revenues (TEB), $ millions 6,103 5,617 4,046 3,741 Domestic Banking Revenue growth 2007 vs. 2006 revenues: +9% Retail & Small Business: +8% + strong asset & deposit growth + higher service fees and credit card revenues - partly offset by lower margin Wealth Management: +14% ⚫mutual funds +24% retail brokerage +10% ⚫ private client • +13% Commercial Banking: +5% • asset & deposit growth Q4/07 vs. Q3/07 revenues: +5% Retail & Small Business: +4% + VISA gain + strong retail asset growth + small business deposit growth - margin compression Wealth Management: -2% lower retail brokerage Commercial Banking: +16% higher deposit revenue 18 992 1,131 884 926 • 2006 2007 Retail & Small Business Wealth Management Commercial Banking 1,617 1,543 1,455 1,066 1,024 967 255 283 277 233 236 274 Q4/06 Q3/07 Q4/07#10Scotiabank Strong market share gains Year-over-Year Increase Residential Mortgages +15 basis points Personal Term Deposits +41 basis points Total Personal Deposits +24 basis points Mutual Funds +16 basis points Domestic market share figures as at September 2007 19 Scotiabank ■ Domestic 2008 Priorities Drive sustainable revenue growth leverage acquisitions & partnerships to acquire new customers • • e.g. Cineplex/SCENE, NHL, NHLPA, CFL build on the strong momentum in wealth management leveraging expanded retail sales force leverage small business expertise Expand/enhance sales & distribution capacity - open 20-25 new branches - upgrade branch technology Maintain earnings momentum & positive operating leverage 20#11Scotiabank International Banking Rob Pitfield Executive Vice President International Banking 21 International Banking Scotiabank Record earnings from broad-based growth 1300 1,232 1,054 650 00 400 0 2006 2007 Net Income* 300 268 270 200 100 0 Q4/06 Q3/07 353 2007 vs. 2006 net income: +17% + revenues up 23% - expenses up 18% (up 15% ex. VAT recovery) • impact of acquisitions • business growth, including new branches • higher credit card & advertising costs - higher taxes, largely Mexico Q4/07 vs. Q3/07 net income: +31% + revenues up 14% - expenses up 4% • business growth initiatives • partly offset by lower benefit costs Q4/07 22 * net income available to common shareholders, $ millions#12Scotiabank More diversified earnings mix 2006 Net Income* - $1,054 million 2007 Net Income $1,232 million LatAm/Asia/Other 16% C&CA 32% * available to common shareholders LatAm/Asia/Other 22% Mexico 52% C&CA 37% 23 Mexico 41% Scotiabank International Banking Higher revenues in all regions revenues (TEB), $ millions 3,989 3,245 1,206 1,366 1,628 1,308 995 731 2007 2006 Mexico ■Caribbean & Central America Latin America, Asia & Other 1,090 953 895 363 322 303 349 393 454 243 238 273 Q4/06 Q3/07 Q4/07 2007 vs. 2006 revenues: +23% Mexico: +13% + strong retail loan growth ⚫ credit cards +36%, mortgages +34% + higher fee income (25% brokerage, 14% credit cards) Caribbean & Central America: +25% + strong asset & deposit growth: •21% commercial loans, 22% credit cards, 18% mortgages + higher fees (credit cards up 35%) Latin America, Asia & Other: +36% + whole year impact of Peru acquisition Q4/07 vs. Q3/07 revenues: +14% Mexico: +13% + strong underlying asset growth and higher margin ⚫credit cards +11%, mortgage +9% + higher securities gains & transaction-driven revenues Caribbean & Central America: +15% + higher other income, including VISA gain Latin America, Asia & Other: +15% + asset growth in Chile, Peru and Asia 24#13Scotiabank International 2008 Priorities ■ Drive sustainable organic revenue growth new segments - affluent, consumer finance, small business aggressively expand distribution network • . add 140 new branches, including 100 in Mexico expand wealth centres across the Caribbean & Latin America ■ Pursue additional acquisition opportunities P&C banking, insurance, wealth management, consumer finance Drive revenue growth & positive operating leverage ต Scotiabank 25 Scotia Capital John Schumacher Co-Head Scotia Capital 26#14Scotiabank Scotia Capital Record net income in 2007 1,200 1,114 1,047 900 600 300 0 2006 2007 Net income* 300 276 235 226 200 100 2007 vs. 2006 net income: +6% + revenues up 3% + higher loan loss recoveries - expenses up 6% . • higher performance-related compensation technology, hiring specialist expertise Q4/07 vs. Q3/07 net income: (18)% - revenues down $124mm net interest income: up $133mm + higher tax-exempt dividend income other income: down $257mm - lower derivatives trading - losses on structured credit instruments + expenses down $42mm • lower performance-related compensation + net loan loss recoveries flat 0 Q4/06 Q3/07 Q4/07 *net income available to common shareholders, $ millions Scotiabank revenues (TEB), $ millions. 2,450 2,388 1,234 1,258 1,154 1,192 2006 2007 Global Capital Markets (GCM) 27 Scotia Capital 2007 revenues higher 2007 vs. 2006 revenues: +3% Global Capital Markets: +2% + strong underlying trading revenues from: • derivatives, fixed income, precious metals & FX offset by lower equity trading Global Corporate & Investment Banking: +3% + higher interest recoveries, M&A, new issue revenue + loans & BAs up 22%, partly offset by lower spreads Global Corporate & Investment Banking (GC&IB) 575 644 520 371 307 235 268 273 285 Q4/06 Q3/07 Q4/07 Q4/07 vs. Q3/07 revenues: (19)% Global Capital Markets: down $136mm + $43mm gain on sale bond index business - losses on structured credit instruments ($135)mm - lower underlying trading revenues vs. record Q3/07 Global Corporate & Investment Banking: up 4% + higher securities gains in the U.S. & Europe - lower credit & investment banking fees 28#15Scotiabank ☐ Scotia Capital 2008 Priorities Drive sustainable revenue growth Leverage NAFTA capabilities Increase market share with alternative asset managers Expand client coverage globally in selected industries e.g. energy, mining Increase presence in infrastructure finance Additional partnering with International Banking Maintain prudent risk management Deliver sustainable net income growth with a high ROE ต Scotiabank 29 Risk Review Brian Porter Chief Risk Officer 30#16Scotiabank Risk Overview ■ Stable credit quality . credit losses flat quarter-over-quarter • net impaired loans stable ■ Market risk well-controlled ■ Asset classes of current focus . exposures not significant 31 Scotiabank Credit losses flat quarter-over-quarter Specific Provision for Credit Losses ($ millions) 95 92 45 63 92 8 25 27 25 19 30 58 26 Q4/06 74 0 66 99 (30) 30 (51) Q1/07 Scotia Capital 77 78 (10) (10) Q2/07 Q3/07 Q4/07 Domestic International 32#17Scotiabank Net impaired loans stable Net Impaired Loans ($ millions) 579 570 601 579 584 207 239 329 360 357 245 245 215 208 229 118 95 35 Q4/06 Q1/07 Q2/07 Q3/07 Scotia Capital Domestic International 33 Q4/07 Quarterly VaR by risk factor Scotiabank Average 1 day VaR, $ millions Risk Factor Q4/07 Q3/07 Q4/06 Interest rate 9.2 9.0 7.4 6.1 8.7 5.9 Equities Foreign exchange 3.9 3.3 1.3 & Commodities Diversification (6.0) (5.4) (4.5) All-Bank VaR 13.2 15.6 10.1 34#18Scotiabank # days 10 8 4 2 Trading revenue Q4/07 Trading Revenue* ($ millions) 0 (17) (14) (12) (6) (4)(3)(2) 0 1 2 3 4 5 6 7 8 9 1011121314 16 ■86% days had positive results in Q4/07 vs. 91% in Q3/07 Daily trading losses exceeded VaR on August 7th * Excludes $115 million loss on consolidation of a Bank-sponsored conduit 35 Scotiabank Asset classes of current focus Asset class U.S. sub-prime mortgage exposure Canadian non-bank ABCP conduits Scotia-sponsored conduits CDOs and CLOS Structured Investment Vehicles (SIVS) LBO underwriting commitments Hedge fund exposure no direct exposure ⚫ indirect exposure nominal Comments ⚫fair value of holdings is $323 mm, of which $187 mm relates to Montreal Accord ⚫ certain holdings were written down by 20% ⚫ other holdings not written down due to planned restructuring, nature of assets in the conduit, or acquired at fair value through purchase of Dundee Bank of Canada ⚫liquidity lines to conduits total $570 mm, of which $370 mm relates to Montreal Accord drawdowns total $88 mm ⚫ commercial paper outstanding for non-consolidated conduits with global liquidity support total $14.5 B ⚫ multi-seller conduits contain primarily traditional assets ⚫nominal U.S. sub-prime exposure nominal commercial paper inventory ⚫ consolidated one conduit whose assets were highly-rated structured credit products ⚫risk has largely been hedged and is being managed as part of the Bank's trading risk ⚫ investments total $1.2B, majority are highly rated; including $516mm acquired at fair value through purchase of Dundee Bank of Canada ⚫ Scotia Capital trades in synthetic CDOS, which is largely a customer driven business ⚫ fair value of investments is $125 mm ⚫ do not sponsor, manage or provide liquidity support to SIVS • $200 mm ⚫ no issues of concern majority of activity is collateralized ⚫no credit issues with counterparties 36#19Scotiabank Scotiabank 2008 Targets Rick Waugh President & Chief Executive Officer 37 2008 targets ■ EPS growth: 7-12% ROE: 20-23% Productivity ratio – less than 57% ■ Maintain strong capital ratios 38#20Scotiabank Scotiabank Appendix 39 Q4/07 Items of note Pre- After- Tax Tax $MM $MM EPS Impact (cents) Business Line Impacted Gain on global VISA restructuring 202 163 16 Dom: 111 Int'l: 91 Gain on sale of bond index business 43 35 3 SC Losses on structured credit (191) (133) (13) instruments SC: 135 Other: 56 Financial instruments accounting (39) (24) (2) All Tax charge (50) (5) Other Forex vs. Q3/07 (55) (37) (4) All 40#21Larger contribution from acquisitions Scotiabank Impact on income ($ millions) 2007 2006 Net interest income $464 $173 Other income 263 118 Non-interest expenses (416) (191) Other items (net of tax) (117) (46) Net income 194 54 Earnings per share (diluted) $0.19 $0.05 Acquisitions Include: Domestic: Maple Trust & Travelers Leasing Corporation International: Costa Rica, Dominican Republic, Jamaica, Peru, Thailand Scotiabank 41 Continue to earn through forex headwinds Impact ($ millions) Q4/07 vs. Q3/07 Q4/07 vs. Q4/06 2007 vs. 2006 Revenues (87) (136) (199) Non-interest expenses 30 52 77 Net income (37) (53) (82) EPS (diluted) (4) cents (5) cents (8) cents Spot Rate Average exchange rate Oct. 31 2007 2006 Q4/07 Q3/07 Q4/06 1.06 $US/$CAD 0.91 0.88 0.98 0.93 0.89 11.27 Mexican peso/$CAD 9.97 9.54 10.79 10.07 9.74 42#22Scotiabank Scotiabank Mexico Scotiabank Mexico Contribution ($ mm) 2007 2006 Q4/07 Q3/07 Net income in pesos, excluding inflation accounting MXP/CAD exchange rate 4,358 5,008 1,391 10.0 9.5 927 10.5 10.1 Net income in CAD, excluding inflation accounting BNS' share (97%) $437 $525 $132 $92 $425 $511 $128 $89 Canadian GAAP and acquisition adjustments $36 $21 $(19) $11 Total contribution in CAD $461 $532 $109 $100 Excl. VAT recovery $481 Scotiabank 43 Earnings in Other segment net income available to common shareholders, $ millions 52 169 98 2006 2007 79 Q4/06 Q3/07 Q4/07 2007 vs. 2006 net income: (42)% + higher securities gains - FI accounting impact expenses up $51mm - a $35mm reduction in general allowance Q4/07 vs. Q3/07 net income: (100)%+ -FI accounting impact - structured credit instruments write-down $56 mm - expenses up $23mm higher taxes + higher securities gains, excluding write-downs (75) The Other category includes Group Treasury and other corporate items, which are not allocated to a business line 44#23Scotiabank ($ millions) 25 15 5 (5) (15) (25) Trading results within 1 Day VaR except one day August 1, 2007 to October 31, 2007 ― Actual P&L* - 1 day VaR Амирит и ■ Q4/07: Average 1 day VaR: $13.2 vs. $15.6 in Q3/07 *excludes $115 million loss on consolidation of a Bank-sponsored conduit 45 Moderate net impaired loan formations Scotiabank (Q4/07, $ millions) Domestic Domestic Retail: formations reflect growing portfolio size; underlying credit trends remain strong - Retail 107 - Commercial 8 115 Domestic Commercial: stable credit quality International - Mexico - Caribbean & Central America 22 13 22 54 - Latin America & Asia 19 Scotia Capital - U.S. - Canada & Other (11) Total 158 46 International: formations primarily in retail portfolios across division, largely mirroring underlying asset growth Scotia Capital: small repayments on a number of accounts in the U.S. and Europe#24Scotiabank $ millions Positive trend in net impaired loans 1,522 388 International Banking ■Domestic Banking Scotia Capital 161 879 201 681 601 129 125 570 973 183 207 360 549 245 373 229 118 12 2003 2004 2005 2006 2007 after specific allowance Scotiabank 47 High level of unrealized securities gains ($ millions) Q4/07 Q3/07 Q4/06 Emerging Market Debt 530 527 658 Fixed Income (14) (103) (88) Equities 456 536 521 48 972 960 1,091