#1Scotiabank Scotiabank Investor Presentation Second Quarter, 2007 May 29, 2007 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 and any applicable Canadian securities legislation. These statements 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. Forward- looking 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. 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; the effect of changes in monetary policy; legislative and regulatory developments in Canada and elsewhere; 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; consolidation in the Canadian financial services sector; changes in tax laws; 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 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 and its securities, 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. 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 887 Overview Rick Waugh President & Chief Executive Officer Second consecutive quarter of record earnings Net Income* ($ millions) 928 1,028 1,012 Change Q2/07 Yr/Yr Qtr/Qtr Net income* $1,028 16% 2% 890 EPS $1.03 16% 2% ROE 23.4% 20 bp 40 bp Productivity ratio 53.8% -150 bp 20 bp Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 * available to common shareholders 4#3Scotiabank annual dividend, per share Continued dividend growth $0.37 16.7% CAGR $1.74* 97 98 99 00 01 02 03 04 05 06 07* ■ 3 cent or 7% dividend increase effective Q3/07 * based on current rate 16% increase in 2007 5 Scotiabank Higher earnings across all business lines year-over-year net income available to common shareholders, $ millions 296 361 364 Domestic 268 Q2/06 Q1/07 Q2/07 316 318 293 294 276 International Scotia Capital Domestic: Continued strong growth in personal lending, particularly in mortgages and personal lines of credit, combined with improved wealth management results. International: Combination of organic growth and acquisitions have fuelled solid year over year growth. Growth in assets, particularly in Mexico and the Caribbean partly offset by higher loan losses in Mexico and a higher effective tax rate. Scotia Capital: Record results with increased contributions from most businesses, buoyed by higher client-driven activities. Scotia Capital also benefited from a benign credit environment to realize continued net loan loss recoveries as well as interest recoveries. 6#4Scotiabank Well positioned to meet 2007 performance objectives YTD Objective EPS Growth 18% VS. 7-12% ROE 23.3% VS. 20-23% Productivity 53.7% VS. <58% ต Scotiabank 7 Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 8#5Scotiabank 887 Net Income* ($ millions) 1,012 Financial Performance Overview 1,028 Q2/06 Q1/07 Q2/07 Q2/07 vs. Q2/06 net income up 16% ■ Total revenues up 13% ☐ Expenses up 10% Strong organic growth and positive impact of acquisitions ■ Reversal of general allowance ($25 million) Q2/07 vs. Q1/07 net income up 2% ▪ Lower provisions, reversal of general allowance and higher interest recoveries Largely offset by shorter quarter and lower securities gains * available to common shareholders 9 Scotiabank Continued strong asset growth average balances, $ billions 404 392 343 93: 78= 40 39 36 86 69 99 104 87 Year-over-year growth Total Assets: +18% ■ Residential mortgages: +19% O Personal loans: +10% ■ Business & government: +30% " positive impact of acquisitions and organic growth Securities: +19% 73 77 78 Q2/06 Q1/07 Q2/07 Residential mortgages Personal Loans Business & Government (includes acceptances) Securities Other 10#6Scotiabank Strong revenue growth year-over-year Revenues (TEB) ($ millions) 2,830 3,214 3,211 1,881 1,903 1,644 1,333 1,308 1,186 Q2/06 Q1/07 Q2/07 Scotiabank Net Interest Income (TEB) Other Income Q2/07 vs. Q2/06 revenues up 13% ■ Broad-based increase due to growth in underlying client base, in part from acquisitions ■ Increased revenues from transaction-based fees, underwriting activities, retail brokerage fees and mutual funds Partly offset by lower securities gains Q2/07 vs. Q1/07 revenues flat ■ Asset growth in most regions and higher interest recoveries largely offset by shorter quarter ■ Growth in several categories more than offset by lower securities gains 11 Expenses flat quarter over quarter Non-interest expenses ($ millions) 1,724 1,726 1,565 Q2/07 vs. Q2/06 expenses: up 10% ■ Nearly half of increase due to acquisitions " Remaining increase due primarily to: • ⚫ higher salaries and benefits costs • increased premises, advertising and 1,003 1,004 928 327 329 298 394 393 339 promotion expenses to support business growth initiatives Q2/07 vs. Q1/07 expenses flat ■ Increased branch expansion costs Largely offset by the shorter quarter and a decrease in stock-based compensation Q2/06 Q1/07 Q2/07 Salaries & employee benefits Premises & technology Other 12#7Scotiabank Positive operating leverage YTD Q2/07 vs. YTD Q2/06 (TEB) Revenue Expense Operating Growth Growth Leverage Domestic 7.0% 3.8% 3.2% International 29.3% 27.2% 2.1% Scotia Capital 7.2% 2.8% 4.4% All - Bank 13.5% 10.3% 3.2% ต Scotiabank 13 Domestic Banking Chris Hodgson Executive Vice President Domestic Personal Banking 14#8Scotiabank 296 Net Income* ($ millions) 361 364 Domestic Banking Strong performance Q2/07 vs. Q2/06 net income: up 23% ■ Revenues up 8% driven by: -strong growth in mortgages, personal lending from organic growth, Maple Trust acquisition -higher wealth management revenues Expenses up 3% largely due to: -business growth (acquisitions, branch expansion) -normal salary increases -volume-driven expenses in wealth management ■ ROE of 32% Q2/06 Q1/07 Q2/07 * available to common shareholders Q2/07 vs. Q1/07 net income: up 1% ■ Revenues flat - shorter quarter Expenses unchanged ■ Loan losses down Scotiabank 15 Domestic Banking Volume growth, market share gains Growth (Yr/Yr) Market Share* Residential mortgages $14 B (17%) (Yr/Yr) Business loans $2 B (8%) Residential Mortgages 18 bp Personal $4 B (6%) deposits Personal Term Deposits 20 bp Business deposits $5 B (14%) Mutual Funds 4 bp *As at March 31 Good momentum from recent acquisitions (Maple, Travelers) 16#9Scotiabank revenues (TEB), $ millions 1,369 Domestic Banking Solid revenue growth 1,472 1,471 980 977 900 258 282 288 211 209 207 Q2/06 Q1/07 Retail & Small Business Wealth Management Q2/07 Q2/07 vs. Q2/06 revenues: up 8% Retail & Small Business: up 9% ■ strong asset and deposit growth ■ lower interest margin higher transaction and card revenues Wealth Mgt - record revenues, up 12% ■ retail brokerage - strong client activity ■ mutual fund - very strong net sales ■ private client - higher AUM, trust fee income Q2/07 vs. Q1/07 revenues: flat ■ average assets up 2%, deposits up 1% margin stable ■ interest income down 1% - shorter quarter ■ other income up 2% Scotiabank Commercial Banking/Other 17 Domestic Banking Update on 2007 priorities Drive sustainable revenue growth > greater emphasis on investment products record mutual fund net sales, exceeding $1.5 billion for the first 6 months - hired several highly respected and proven senior mutual fund industry executives enhance product offerings increase sales through all distribution channels - continued strong growth in fee-based assets record levels of AUA, AUM > new marketing initiatives SCENE entertainment rewards program, VISA & debit cards - renaming of 5 major Cineplex theatres > plan to open 35 new branches - - opened 9 new branches year to date 18#10Scotiabank International Banking Rob Pitfield Executive Vice President International Banking 19 Scotiabank Net Income* ($ millions) International Banking Investing for Future Growth Latin America, Asia & Other Caribbean & Central America ■Mexico 316 293 268 62 46 107 92 99 22 99 147 130 124 Q2/06 Q1/07 Q2/07 * available to common shareholders Q2/07 vs. Q2/06 net income: up 9% ■ Revenues up 29% from acquisitions combined with strong organic growth " Expenses up 30%, investing for future growth: - - acquisitions (about half the increase) - 50 new branches in Mexico in the past year - marketing initiatives Higher loan losses: ■Caribbean benefited from some provision reversals last year low provisions in other regions in 2006 Higher effective tax rate in Mexico Q2/07 vs. Q1/07 net income: down 7% ■ Revenues up 1% Expenses up 3%: - higher expenses in Mexico marketing initiatives in Caribbean Higher loan losses in Mexico 20#11Scotiabank International Banking – higher revenue from organic growth, acquisitions revenues (TEB), $ millions. 979 967 762 339 342 296 315 387 394 241 243 151 Q2/06 Q1/07 Mexico Q2/07 Caribbean & Central America Latin America & Asia Q2/07 vs. Q2/06 revenues: up 29% ■ Mexico revenues up 16%: - • strong asset and deposit growth higher retail brokerage, and credit card fees ■ Caribbean & Central America revenues up 25%: acquisitions - Costa Rica, Dominican Republic strong organic retail loan growth, particularly in Bahamas, Trinidad & Tobago - ■ Latin America & Asia up 62% due mainly to: Peru acquisitions strong asset growth in Asia Q2/07 vs. Q1/07 revenues: up 1% ■ Mexico up 1% on volume growth, higher spreads, higher other income ■ Caribbean & Central America up 2% on asset growth, impact of Jamaica broker acquisition Latin America & Asia revenues up 1% ☐ 21 Scotiabank International Banking Update on 2007 priorities Drive sustainable revenue growth > Strong organic growth ■ retail loan volumes up 30% from last year, primarily mortgages and credit cards ■ expanding distribution network • adding 125 new branches (85 in Mexico) & 100 ABMs ☐ ■ increasing non-branch sales forces, telemarketing, direct mail > Pursue acquisition opportunities " growing contribution from acquisitions in Peru, Costa Rica, Dominican Republic and Jamaica ▪ announced the acquisition of nearly 25% of Thanachart Bank in Thailand 22#12Scotiabank Scotiabank Net Income* ($ millions) 276 294 Q2/06 Scotia Capital John Schumacher Co-Head Scotia Capital 23 318 Scotia Capital Solid quarter Q2/07 vs. Q2/06 net income: up 15% ■ Revenues up 13% Expenses up 3% due to: Q1/07 Q2/07 * available to common shareholders - higher salaries and technology costs - partially offset by lower performance-based compensation ■ Continued loan loss reversals and recoveries, primarily in the U.S. portfolio; no new loan loss provisions Q2/07 vs. Q1/07 net income: up 8% ■ Revenues up 4% due to higher interest recoveries ▪ Expenses up 1% due to: - higher performance-based compensation mostly offset by lower signing bonuses ■ Increased loan loss provision reversals and recoveries, mainly in the U.S. 24#13Scotiabank Scotia Capital revenues - Strong loan volume growth, interest recoveries revenues (TEB), $ millions 630 580 656 322 331 312 334 299 268 Q2/06 Q1/07 Global Capital Markets (GCM) Q2/07 Global Corporate & Investment Banking (GC&IB) Q2/07 vs. Q2/06 revenues: up 13% Global Corporate & Investment Banking: up 25% Higher interest recoveries from impaired loans Higher lending volumes: up 24% - primarily investment grade ■ Increased investment banking revenues Partly offset by narrower spreads Global Capital Markets: up 3% Strong results in precious metals, fixed income Q2/07 vs. Q1/07 revenues: up 4% ■ Increased interest recoveries Higher results in investment banking, including M&A Partly offset by lower capital markets revenues, corporate banking fees 25 Scotiabank Scotia Capital Update on 2007 priorities > Enhance NAFTA platform - expand product capabilities, particularly in Mexico > Build additional global specializations broadened client and research coverage in - oil & gas sector recent additions in mining sector showing early promise - increase business with alternative asset managers - ramp up marketing efforts > Maintain strong credit discipline 26#14Scotiabank Scotiabank $ millions Risk Review Brian Porter Chief Risk Officer 27 Favourable credit conditions continue Change Q2/07 Yr/Yr Qtr/Qtr Provision for Credit 20 (15) (43) Losses (PCL) Specific Provisions 45 10 10 (18) Net Impaired Loans* 579 ■ General Allowance: $1,298 million - $25 million reduction in Q2/07 $1.5 billion of credit protection purchased * after specific allowance for credit losses 28#15Credit losses remain low Scotiabank $ millions Domestic: Change Q2/07 Yr/Yr Qtr/Qtr - Retail Banking 72 - Commercial 26 9 1 (6) (31) (9) 66 (22) (8) International: - Mexico 19 9 15 - Caribbean & Central America 13 24 3 - Latin America & Asia (2) (4) (7) 30 29 11 Scotia Capital: - U.S. - Canada & Other Other Total Specific Provisions Reduction of General Allowance Total (50) (20) (21) (1) 23 (51) 3 (21) - 45 10 (18) (25) (25) (25) 20 (15) (43) 29 Scotiabank Moderate net impaired loan formations Q2/07, $ millions Domestic: - Retail - Commercial 78 (20) 58 International: - Mexico 46 - Caribbean & Central America - Latin America & Asia 29 432 53 128 Scotia Capital: - U.S. - Canada & Other (117) (4) (121) Total 65 Domestic Retail: formations reflect growing portfolio size; underlying credit trends remain strong. Domestic Commercial: payment of one large account; stable credit quality. International: formations primarily in retail portfolios across division, largely reflecting their growing size. Classified two commercial accounts in the Caribbean. 30 Scotia Capital: repayment on two large accounts in the U.S. Formations down $12 million vs. Q1/07#16Scotiabank $ millions Trading results within 1 day VaR February 1, 2007 to April 30, 2007 20 110 10 (10) (20) Actual P&L 1 day VaR ■ Q2/07: Average 1 day VaR: $11.3 mm vs. $9.2 mm in Q1/07 ■ Q2/07: No loss days exceeded the 1 day VaR 31 Market risk well diversified Scotiabank Average 1 day VaR, $ millions Risk Factor Interest rate Equities Foreign exchange Commodities Diversification All-Bank VaR Change vs. Q2/07 Q1/07 Q2/06 7.2 - 2.7 5.2 1.6 (0.2) 1.2 (0.7) (0.7) 1.5 0.8 0.1 (3.8) 0.4 1.4 11.3 2.1 3.3 • Most of exposure in interest rate and equity risks • Commodities exposure mostly in precious metals trading 32#17Scotiabank Market risk - trading controls Board-approved policies and limits - Active, independent oversight – risk management staff physically located on trade floors Independent validation of models and market data used for valuation ■ Valuation reserves for risk concentrations, market illiquidity Daily P&L analysis ■ Regular stress-testing of portfolios ต Scotiabank 33 Outlook Rick Waugh President & Chief Executive Officer 34#18Scotiabank Delivering on 2007 Priorities 1. Delivering sustainable revenue growth - Domestic (+8%): continued strong asset growth & improved Wealth Management results from higher cross-sell and new customer acquisition International (+29%): broad-based asset, revenue and customer growth Scotia Capital (+13%): strong investment banking revenues & growth in investment-grade assets 2. Effective use of capital: investing for future growth - positive impact of acquisitions - expanding distribution network, leveraging technology and marketing strength in balance sheet and capital ratios 3. Continued development of people and leaders 35 Scotiabank Appendix 36#19Scotiabank % 1.97 All Bank 1.98 Net interest margin 1.91 1.93 1.89 Domestic 2.74. 2.67 2.62 2.58 2.58 International 4.15 4.19 4.20 4.09 4.03 Scotia Capital 0.76 0.73 0.71 0.71 0.79 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Scotiabank All-Bank margin: +2 bps qtr/qtr Domestic margin: flat qtr/qtr International margin: (6) bps qtr/qtr ■ negative impact of mark-to-market on financial instruments Scotia Capital margin: +8 bps qtr/qtr higher interest recoveries " 37 International Banking Changing Regional Mix 22% 44% 2007 YTD Net Income - $609MM 34% 2006 YTD Net Income $501MM - 34% 54% 12% Mexico Caribbean & Central America ☐ Latin America, Asia & Other 38#20Scotiabank Mexico Contribution Q2/07 Q1/07 Q2/06 ($ millions) Net income in pesos, excluding inflation accounting 1,084 956 1,037 MXP/CAD exchange rate 9.6 9.5 9.5 Net income in CAD, excluding inflation accounting BNS' share (97%) $113 $101 $110 $110 $98 $107 Canadian GAAP and acquisition adjustments $1 $43 $17 Scotiabank Mexico contribution in CAD $111 $141 $124 ■ Canadian GAAP and acquisition adjustments relate mainly to taxes and loan losses Strong positive underlying trends: strong revenue growth, loan losses reflecting portfolio growth, investing in initiatives to drive future growth 39 Scotiabank $ millions Domestic: Retail Trend in net impaired loan formations by business Commercial Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 73 44 17 43 628 76 77 81 78 20 29 6 (20) 96 106 80 87 58 International Retail 43 52 52 70 74 87 Commercial (34) (31) (43) (9) 9 21 27 65 15 41 128 Scotia Capital (115) (98) 36 (75) (121) 11 19 169 77 65 40#21Scotiabank Low variability of trading revenue trading revenue, Q2/07 # days 10 8 6 2 0 Scotiabank (7) (6) (5) (4) (3) (2) (1) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 $ millions 95% days had positive results in Q2/07 vs. 98% in Q1/07 41 Strong capital ratios - despite growth in risk-weighted assets % of risk-weighted assets $ billions 206.8 213.1 10.2 10.0 10.2 10.4 10.1 197.0 190.3 180.1 8.5 8.4 8.3 8.4 8.0 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Tier 1 Tangible Common Equity (TCE) 42 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Loans & Acceptances Residential Mortgages Securities Cash, Other Assets & Off Balance Sheet#22Scotiabank $ millions High level of unrealized securities gains Q2/07 Q1/07 Q2/06 Emerging Market Debt 723 714 619 Fixed Income (79) (127) (201) Equities 564 574 523 1,208 1,161 941 43