#1Scotiabank Investor Presentation Second Quarter 2001 1 Overview of Q2/01 Results Peter Godsoe Chairman & C.E.O. 2#2Q2/01 Performance Highlights ■ Excellent earnings growth ➤ EPS up 16% year-over-year ➤ ROE 17.9% vs. 17.7% ☐ ■ First full quarter of Inverlat ➤ added $17 million to net income (3 cents/share) Improved productivity: 53.7% vs. 58.0% last year ■ Lower net impaired loans ➤ down $388 million from Q1/01 $100 million addition to general provision Strong capital ratios and reserves 3 Record of consistent earnings growth Net Income, $ millions 539 510 495 497 465 416 397 402 384 Q2/99 Q3/99 Q4/99 * excludes unusual items Q1/00 Q2/00 Q3/00* Q4/00 Q1/01 Q2/01 4#3ROE Exceeded targets Q2/01 2001 YTD Target 17.9% 17.4% VS. 16-18% EPS Growth 16% 19% VS. 12-15% Productivity 53.7% 52.7% VS. <60% Tier 1 9.0% 9.0% VS. 7.5%+ 5 Performance Review Sabi Marwah Executive Vice-President & Chief Financial Officer 6#4$ millions Strong earnings Reported net income 539 Adjustments: Pre-tax After-tax Addition to General Provision 100 59 Lower SAR* expense (40) (24) Excess security gains (40) (24) 20 20 11 11 550 Adjusted net income * Stock Appreciation Rights 7 $ billions (TEB) 2.3 Q2/00 Good top line revenue growth Revenue up 13% Net Interest Income up 21% 2.4 Q1/01 Q2/01 includes Inverlat's revenues of $222 million 8 2.6 Q2/01 Other Income Net Interest Income#5Improved margins Increase Q2/01 vs. Q1/01 vs. Q2/00 Net interest margin 2.34% +11 bps +9 bps Increase due to: Inverlat Other 9 8 8 3 1 11 bps 9 bps Underlying Other Income maintained $ millions Reported Less: Gain on sale of securities Change Q2/01 Q2/00 $ % 1,014 988 26 3% (109) (147) 38 Inverlat (73) (73) Stock transfer business sold in Q3/00 (20) 20 ■ Underlying 832 821 11 1% Comprised of: Underwriting & other commissions Deposit & payment services Credit fees Retail & discount brokerage Trading & other investment banking Other 35 52% 12 8 10 7 (40) (32) (7) (5) 1 1 11 1% 10#650 50 99 55 Expenses held basically flat Q2/01 vs. Q1/01 Q2/00 10.7% 4.7% Change in expenses Less: - Inverlat 14.1 13.3 - performance-related (2.8) (4.2) - writedown of property & equipment (3.4) - sale of stock transfer business/ (2.1) Quebec branches Base expenses (0.6) 1.1 Q2/01 includes Inverlat's expenses of $177 million 11 Improved productivity expenses as % of revenues 60 58.6 Q1/00 Q2/00 Q3/00* Q4/00 Q1/01 Q2/01 excluding special items 12 53.7#7Stronger capital ratios % of risk-adjusted assets 12.0 12.5 Total 9.0 Tier 1 8.4 7.0 Common 7.8 Q2/00 Q2/01 13 Higher reserves $ billions Govt/Corp bonds 0.3 Equities 0.3 Emerging Mkt. Bonds 0.3 2.3 0.9 2.0 Marketable 0.9 Securities Q2/00 14 1.4 General Provision Q2/01#8Business Line Results 15 Domestic - Solid earnings trend Net income, $ millions 21* ☐ 223 212 203 Q2/00 Q1/01 Q2/01 gain on sale of Quebec branches Higher net interest profit wider retail margin ➤ solid personal lending growth ■ Lower brokerage fees ☐ Expenses down 4.5% yr/yr 16 Very good credit quality#9Improved performance from Scotia Capital Net income, $ millions 162 120 192 ■ Net income up 19% yr/yr ■ Provision for credit losses down 48% versus Q1/01 ■ Revenues up 19% yr/yr Global Trading +55% ➤ Underwriting +52% ➤ Lending +9% Q2/00 Q1/01 Q2/01 17 Rising International contribution Net income, $ millions 115 95 149 Latin America Q2/00 Q1/01 Q2/01 18 ■ Net income up 57% yr/yr ➤ Caribbean up 23% ➤ Asia up 32% ➤ Latin America up 160% • Inverlat +$17 million#10Mexico - High potential market High growth economy ➤ increasing trade - NAFTA ➤ GDP to surpass Canada by end of decade Significant growth potential in financial services ➤ young population: 50% under 22 ➤ lending as a % of GDP -15% vs. 72% in U.S. 19 Risk Review John Crean Senior Executive Vice-President Global Risk Management 20 20#11Risk Overview ■ Lower net impaired loans: $0.7 billion at April 30 " ➤ down $388 million from Q1/01 Aggressive provisioning ➤ $250 million specifics in Q2/01 ➤ $1.1 billion specific provisions estimate for 2001 • of which $650 million taken to date Higher general provision ➤ added $100 million in Q2/01 Improved coverage ratio ➤ 85% vs. 78% in Q1/01 21 Impaired loan formations down in Q2/01 $ millions Scotia Capital - loan sales (502) - net new formations 371 (131) Domestic International Net formations 1 34 (96) 22#12Domestic & International Credit quality stable ■ Domestic ➤ excellent retail ➤ commercial in good shape ■ International ➤ Caribbean & Asia performing well ➤ stabilized Latin American subsidiaries 23 - Lower net impaired loans in Q2 - On track to meet Q4/01 target Net impaired loans, billions 2001 Forecast 1.2 1.1 1.0 0.8 0.7 0.6 0.4 0.2 0.0 Q1/01 Q2/01 24 | 0.25 Q4/01#13$ millions Specific provisions by business line 2000 2001E Scotia Capital 412 570 Domestic 168 175 International 185 180 765 925 Additional charge in Q1/01 175 (mainly for Scotia Capital) 1,100 25 Specific provisions forecast for 2001 $ millions 400 400 300 200 100 0 250 225 Forecast 225 Dono Q1/01 Q2/01 Q3/01 Q4/01 26#14Stable telecom & cable exposure Loans & acceptances, $ millions, April 30, 2001 Investment Sector Grade Non-Investment Grade Total Total U.S. Exposure Cable Operators 373 1,133 1,506 616 Regulated Telephone 1,018 1,018 Unregulated 677 1,142 1,819 948 telephone/wireless Other communications 28 409 437 355 Total 2,096 2,684 4,780 1,919 Of which CLECS 148 98 20 15 10 Total exposure down $75 million from Q1/01 Net impaired loans: $52 million 27 Low trading risk $ millions, Feb 1, 2001 to April 30, 2001 -5 -10 Actual P&L -15 VaR 1 day -20 28 الساليسي#15Risk Summary ■ Proactively managing U.S. portfolio ■ Other portfolios in good shape ■ Expect impaired loans to decline for balance of year ■ Low trading risk 20 29 Summary Peter Godsoe Chairman & C.E.O. 30#16Summary ■ On track to achieve performance targets: ➤ earnings growth 12-15% ➤ ROE 16-18% ➤ expect another record year Very good cost control Proactively managing U.S. credit portfolio ◉ Strong capital & reserves 31 This presentation includes forward-looking statements about objectives, strategies, and expected financial results. Such forward-looking statements are inherently subject to risks and uncertainties beyond the Bank's control, including but not limited to economic and financial conditions globally, regulatory developments in Canada and elsewhere, technological developments, and competition. These and other factors may cause the Bank's actual performance to differ materially from that contemplated by forward-looking statements, and the reader is cautioned not to place undue reliance on such forward-looking statements. 32