#19 Scotiabank Scotiabank Investor Presentation January 31, 2003 1 First Quarter Overview Peter Godsoe Chairman & Chief Executive Officer 2#2Scotiabank Performance highlights Consistent solid earnings ➤ EPS: $1.11 vs. $1.10 (ex. Argentina) ➤ ROE: 16.6% vs. 17.3% (ex. Argentina) Strength from diversified earnings base Some improvement in credit quality this quarter ➤ Net impaired loans: $559 million, down $61 million from Q4/02 ➤ Specific provisions: $325 million, down $150 million from Q4/02 ( ex. Argentina) Leading productivity ratio: 51.2% vs. 56.7% in Q1/02 " Excellent capital ratios Scotiabank ➤ Tier 1: 10.0% ➤ Tangible Common Equity (TCE): 8.5% 3 EPS, $ Consistent solid earnings in a challenging environment 1.10 1.11 1.01 1.04 1.05 1.09 1.11 1.05 0.95 Q1/01 Q2/01 Q3/01 0.05 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 * charges relating to Argentina of $1.05/share 4#3Scotiabank Good start - meeting most 2003 targets ROE Q1/03 Target 16.6% VS. 15-18% EPS Growth* 1% VS. 5-10% Productivity Tier 1 51.2% VS. <58% 10.0% VS. 8%+ *excluding 2002 charges relating to Argentina Scotiabank 5 Performance Review Sabi Marwah Senior Executive Vice-President & Chief Financial Officer 6#4Scotiabank $ millions (TEB) Steady top-line revenue 2,738 2,728 2,770 2,665* 2,729 2,721 2,598 2,645 2,437 Q3/02 Q4/02 Q1/03 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 * including charges relating to Argentina of $107 million Scotiabank 7 Lower margins this quarter Net interest margin Funding (N.A. & Europe) U.S. corporate Latin America Canadian margin Other Q1/03 vs. Q4/02 vs. Q1/02 2.17% (11) bps (24) bps (3) (13) (4) (3) (6) 2 (3) (3) (11) bps (24) bps 8#5Strong growth in other income Scotiabank $ millions Change Q1/03 vs. Q4/02 Change Q1/03 vs. Q1/02 $ 15 % % 2 Reported 165 19 Less: effect of sales of Argentine (122) operations & merchant acquirer 43 23 business 137 15 Underlying 66 73 Trading revenue 27 100+ Investment securities gain 13 33 Foreign exchange & other 12 12 Underwriting fees & other 19 3 Other 223503 360022 13 16 38 10 12 9 Expenses well controlled Scotiabank $ millions Change Q1/03 vs. Q4/02 $ % (207) (13) Reported (252) Change Q1/03 vs. Q1/02 બ % (157) (10) (75) Less: effect of sales of Argentine operations & merchant acquirer business 66 99 Expense recoveries/tax settlement (21) (1) 45 Performance/stock-based compensation (66) (5) Base expenses 10 n/a (82) (6) (50) (32) (3)#6Continued productivity leadership expenses as % of revenues Scotiabank 62 62 58 54 5.4 50 50 98 T 99 96 Scotiabank 51.2% 00 00 01 02 Q1/03 11 Excellent capital ratios - particularly Tangible Common Equity % of risk-weighted assets 9.2 10.0 9.9 Tier 1 8.3 8.5 7.7 Tangible Common Q1/02 Q4/02 12 Q1/03 Equity#7Scotiabank Scotiabank Strong capital provides flexibility High Capital Levels Financial Flexibility $ millions 13 ■ Business expansion Well positioned for Canadian bank consolidation ■ Cushion to handle ◉ unforeseen risks Dividend increases ■ Share buybacks Significant improvement in securities' surplus Securities' Surplus (Deficit) Q1/03 Q4/02 Emerging Market Debt 343 219 - Fixed Income 15 (113) - Equities (114) (131) 244 (25) 14#8Scotiabank Business Line Results 15 Scotiabank Steady performance across business lines net income, $ millions. 294 279 Domestic Q1/02 Q1/03 175* 167 146 138 International * Including after-tax charges related to Argentina, net loss was $365 million 16 Scotia Capital#9Scotiabank Domestic - continuing strong performance net income, $ millions 279 267* 294 Net income increase ➤ up 5% vs. Q1/02 ➤up 10% vs. Q4/02 Good retail asset and core deposit growth ➤ residential mortgages up 11% ➤ revolving credit up 20% ➤ core deposits up 18% ■ Expenses well controlled Q1/02 Q4/02 Q1/03 • excludes $80 million after-tax gain on sale of merchant acquirer business 17 Scotiabank Leveraging strengths in retail lending Unique bundled products ■ Increased market share ☐ ➤ Mortgages: up 33 bps year-over-year ➤ Personal lending: up 49 bps year-over-year Risk profile - best of class ➤ Provision for credit losses: 23bps High and increasing proportion of portfolio secured 55% of ScotiaLine and Scotia Line VISA secured 18#10Scotiabank International - diversified earnings net income, $ millions 175* 128 167 " Caribbean ➤ net income: +11% vs. Q4/02 ➤ highly-rated customer service ➤ broad based asset growth Latin America ➤ Inverlat up 56% vs. Q1/02 ➤ improved results from Sud Americano in Chile Q1/02 Q4/02 Q1/03 Asia ➤ assets up 12% vs. Q1/02 * Including after-tax charges related to Argentina, net loss was $365 million 19 Scotiabank Scotiabank Inverlat - rising contribution net income, $ millions 25 25 23 Q1/02 37 36 Q2/02 Q3/02 Q4/02 Q1/03 Strong loan growth ➤ personal up 38% year over year ➤ corporate and commercial up 16% year-over-year ■ Increase core deposits ➤ market share up 140 bps to 6% over 15 months ■ Tied for #1 in customer service Negotiating with Mexican government to purchase remaining stake 20#11Scotiabank - Scotia Capital – improving results net income, $ millions 146 58 Lower provisions ➤ down $36 million vs. Q1/02 138 ➤ down $142 million vs. Q4/02 Record underwriting and advisory fees ➤up 40% year-over-year • Lower expenses ➤ down 13% from Q1/02 ➤ down 8% from Q4/02 Narrower funding spreads U.S. repositioning underway Q1/02 Q4/02 Q1/03 21 Scotiabank Risk Review Warren Walker Executive Vice-President Global Credit Risk Management 222 22#12Scotiabank Credit risk overview ■ Net impaired loans down $61 million vs. Q4/02 ➤ some successful restructurings in U.S. ➤formations in Europe ■ Specific provisions: $325 million ➤ down $150 million from Q4/02 (ex. Argentina) Scotiabank 23 Net formations by region $ millions, Q1/03 Scotia Capital - Europe 406 - U.S. (97) - Canada (32) Sub Total 277 Domestic 84 International Total 14 375 24#13Scotiabank Trend in net formations net formations, $ millions (ex. Argentina) 1050 ☐ Other Scotia Capital 900 750 835 600 450 300 324 277 308 150 198 0 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 25 Scotiabank Trend in specific provisions specific provisions, $ millions 400 350* 350 Q1/02 Q2/02 Q3/02 *excluding Argentina 26 475* 325 Q4/02 Q1/03 Other Scotia Capital#14Scotiabank Slight decrease in net impaired loans this quarter C$ billions 2.5 1.5 % of loans & acceptances 2.50% 1.50% 559 mm 0.5 0.50% 0.0 0.00% -0.5 -0.50% 1990 1992 1994 1996 1998 2000 2002 Q1/03 27 Lower cable & telecom exposure Scotiabank Loans & acceptances, $ millions Investment Non-Investment Sector Total Grade Grade Q1/03 Q4/02 Q1/03 Q4/02 Q1/03 Q4/02 Cable operators 486 223 1,667 1,666 2,153 1,889 Regulated telephone 663 1,112 199 249 862 1,361 Unregulated telephone 66 69 338 374 404 443 Wireless 179 167 799 782 978 949 Long-haul fibre cable 79 87 79 87 CLECs 84 93 84 93 Total 1,394 1,571 3,166 3,251 4,560 4,822 By region: U.S. 53% Canada 10% Europe & other 37% 28#15Scotiabank Cable & telecom - coverage Jan. 31, 2003 Gross Loans & BAs (before write-offs) Gross Impaired (before write-offs) Write-offs, Net Reserve Provisions Impaired Coverage $MM $MM % $MM $MM % Unregulated 508 202 40% 151 51 75% telephone Wireless 978 123 13% 24 99 20% Long-haul fibre 214 185 86% 155 30 84% cable CLECs 183 121 66% 121 100% Cable 2,184 505 23% 82 423 16% operators Sub total 4,067 1,136 28% 533 603 47% Regulated 862 telephone Total 4,929 1,136 23% 533 603 47% 29 Scotiabank Lower power & energy trading exposure Loans & acceptances, $ millions Sector Investment Grade Non-Investment Total Grade Q1/03 Q4/02 Q1/03 Q4/02 Q1/03 Q4/02 Regulated utilities 751 1,213 641 630 1,392 1,843 Diversified generation 46 833 789 879 789 Independent power 557 558 379 475 936 1,033 projects with PPAs* Other power projects 184 202 1,025 1,005 1,209 1,207 Total 1,538 1,973 2,878 2,899 4,416 4,872 By region: U.S. 77% Canada 14% Europe & other 9% Power Purchase Agreements 30#16Scotiabank Jan. 31, 2003 Power & energy trading - coverage Gross Loans Gross Impaired & BAs (before w/o) (before w/o) Write-offs, Provisions Impaired Coverage Net Reserve $MM $MM % $MM $MM % Diversified generation 973 280 29% 176 104 63% Independent power 959 160 17% 78 82 49% projects with PPAs* Other power projects 1,209 102 8% 53 53 49 49 52% Sub total 3,141 542 17% 307 235 57% Regulated utilities 1,393 4 1% 1 3 25% Total 4,534 546 12% 308 238 56% * Power Purchase Agreements Scotiabank # days 14 12 10 8 00 9 4 31 Low variability of trading revenue... trading revenue, first quarter 2003 = 95%+ days positive 2 0 (4) (3) (2) (1) 01 2 3 4 5 6 7 8 9 10 11 12 $ millions 32#17Scotiabank ...reflecting moderate market risk $ millions, November 1, 2002 to January 31, 2003 20 10 0 Actual P&L VaR 1 day тури -10 -20 Scotiabank Average 1 day VaR = $9.6 mm 33 Risk summary ■ Good credit quality in Domestic & International ■ Closely monitoring Scotia Capital ➤ particularly the Power portfolio ■ Expect moderate decline in provisions in 2003 34#18Scotiabank Scotiabank Outlook Peter Godsoe Chairman & C.E.O. 35 Outlook Economic outlook somewhat uncertain Managing credit portfolios remains the priority Strength from earnings diversification and high capital levels Expect to meet 2003 performance targets ➤ EPS: 5-10% ➤ ROE: 15-18% 36#19Scotiabank This document includes forward-looking statements which are made pursuant to the "safe harbor" 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, regulatory developments in Canada and elsewhere, technological developments, 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. 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 or on behalf of the Bank. 37