#1Scotiabank Investor Presentation First Quarter, 2006 March 3, 2006 1 Scotiabank 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. 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; 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 59 of the Bank's 2005 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. The "Outlook" section that follows 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 these sections. 2#2Scotiabank Overview Rick Waugh President & Chief Executive Officer 3 Scotiabank Q1/06 - record results Good start to year ■ Record results - EPS: $0.84 vs. $0.77 last year ■ - ROE: 21.6% vs. 21.0% last year Earnings well diversified across businesses ■ Credit quality stable ◉ Strong capital ratios - Tangible Common Equity (TCE): 9.0% 4#3Scotiabank Solid contribution from all 3 businesses net income available to common shareholders, $ millions Scotiabank 329 326 329 206 174 Q1/05 Q4/05 Q1/06 258 247 233 229 Domestic International Scotia Capital ROE 5 Meeting our 2006 financial performance objectives Q1/06 Objective 21.6% VS. 18-22% EPS Growth 9% VS. 5-10% Productivity 55.2% VS. <58% 6#4Scotiabank Scotiabank $ millions, TEB 2,735 Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 7 Broad-based revenue growth 3% 2,830 2,614 Net Interest Income (TEB) ☐ Other Income 8% 2,830 Q4/05 Q1/06 Q1/05 Q1/06 8#5Scotiabank Margin unchanged from Q4/05 Q1/06 vs. Q4/05 vs. Q1/05 Net interest margin 1.97% (3) bps Canadian currency margin Foreign currency margin 9 1 2 (1) (5) (3) bps Scotiabank $ millions Broad-based growth in other income - led by record trading revenues Change Q1/06 vs. Q4/05 $ % 75 6 Underlying (4) Impact of stronger Canadian dollar 71 6 Change Q1/06 vs. Q1/05 $ % 125 11 21 17 14 13 (5) (6) (30) 25 114 (11) 114 10 33 32 ༄༄ ལྷ8ས➢ ་ °@®8* 10 10 117 (15) 8 6 8 50% (6) (17) (35) Reported Trading revenues Net gain on investment securities Deposit & Payment services Retail brokerage Mutual funds Card revenues Credit fees Securitization revenues Underwriting fees & other Other 71 6#6Expenses well controlled Scotiabank 5 millions Change Q1/06 vs. Q4/05 Change Q1/06 vs. Q1/05 $ % $ % (9) (1) Underlying 118 8 (8) Impact of stronger Canadian dollar (13) (17) (1) Reported 105 7 (17) Salaries 24 19 Pension & employee benefits 24 71 Performance & stock-based compensation 16 (21) Premises & technology 8 (34) Advertising & business development 4 (35) Other 29 (17) (1) 105 7 Scotiabank 65 60 55 50 50 11 Industry-leading productivity expenses as % of revenues 55.2 45 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 12#7Scotiabank Strong capital ratios % of risk-adjusted assets 12 11.2 10 11.1 10.8 Tier 1 8 9.5 9.3 9.0 Tangible Common 6 Equity 4 Scotiabank 2 0 Q1/05 Q4/05 13 Q1/06 High level of unrealized securities' gains $ millions Q1/06 Q4/05 Q1/05 Emerging Market Debt 598 574 575 - Fixed Income (46) (38) 45 - Equities 538 499 554 1,090 1,035 1,174 14#8Scotiabank Scotiabank $ millions Business Line Results 15 Domestic Banking – - strong retail asset growth " Net income of $329 million % Net income* -ROE 350 50 " 45 300 40 250 35 30 200 25 150 20 100 15 10 50 5 0 0 Q1/05 Q4/05 Q1/06 " ROE of 30.5% ◉ Revenues up 3% yr/yr, down 2% qtr/qtr - strong retail asset growth, up 10% yr/yr - lower interest margin - higher wealth revenues Expenses - - up 6% yr/yr; higher performance-based compensation down 4% qtr/qtr; seasonal declines in several categories Loan loss provisions lower provisions in commercial * net income available to common shareholders 16#9Scotiabank International - a strong performance $ millions % Net income* -ROE 250 200 150 100 50 40 35 30 $25 20 15 10 Net income of $233 million - - up 13% yr/yr, 34% qtr/qtr • strong growth in assets, up 8% yr/yr ROE: 22.9% Higher revenues - up 16% yr/yr, 5% qtr/qtr Expenses: - 5 up 17% yr/yr, down 7% qtr/qtr 0 0 ◉ Provisions up slightly Q1/05 Q4/05 Q1/06 * net income available to common shareholders 17 up $20 mm yr/yr, $11 mm qtr/qtr Scotiabank Grupo Scotiabank - record contribution earnings contribution, $ millions 150 125 100 75 50 50 25 0 Q1/05 Q4/05 Q1/06 ■ Contribution of $139 million - up 78% yr/yr, 76% qtr/qtr ■ ROE: 36% ■ Revenues up 27% yr/yr, 9% qtr/qtr - higher credit card and other retail revenues - gain on sale of investment securities ■ Lower expenses qtr/qtr - advertising and promotion - performance-based compensation 18#10Scotiabank $ millions Scotia Capital - record trading revenues Net income of $258 million - up 4% yr/yr, up 13% qtr/qtr ROE of 32.3% Revenue up 12% yr/yr, 15% qtr/qtr - record revenues from derivatives, equity trading Expenses down 3% yr/yr up 28% qtr/qtr mainly due to higher performance-based compensation Lower new provisions and continued recoveries % Net income* ROE 300 50 45 250 40 ◉ 35 200 30 150 25 20 100 15 50 10 50 5 ■ 0 0 Q1/05 Q4/05 Q1/06 * net income available to common shareholders 19 ด Scotiabank Risk Review Brian Porter Chief Risk Officer 20 20#11Scotiabank Stable credit quality ■ Stable specific provisions: $75 mm - down $6 mm vs. Q4/05 - up $1 mm vs. Q1/05 ■ Positive trend in net impaired loans: $659 mm - down $22 mm vs. Q4/05 - down $103 mm vs. Q1/05 21 Stable level of specific provisioning - Scotia Capital benefiting from net recoveries Scotiabank $ millions Q1/06 Q4/05 Q1/05 Domestic: 64 69 76 International: 27 16 7 Scotia Capital: - U.S. (12) (20) (19) - Other (4) 13 10 (16) (7) (9) Other Total 3 75 81 74 22#12Net formations this quarter Scotiabank $ millions Domestic - Retail - Commercial 106 International Scotia Capital - · Canada - U.S. - Europe Total 23 (3) 103 82 -2 (5) (53) (20) (78) 107 Scotiabank $ millions Positive trend in impaired loans 3,269 1,487 2,028 762 Gross Impaired Loans Net Impaired Loans* 1,763 Q1/04 Q1/05 Q1/06 after specific allowance 24 659#13Scotiabank $ millions 35 25 25 15 5 -5 -15 Scotiabank Moderate market risk November 1, 2005 to January 31, 2006 Actual P&L VAR 1 day тилит Average 1 day VAR = $8.1 mm 25 Risk summary ☐ Credit quality remains stable continue to closely monitor auto and forestry sectors - actively managing portfolios ■ Market risk well controlled 26#14Scotiabank Outlook Rick Waugh President & Chief Executive Officer Scotiabank 27 24 Outlook 1. Focusing on three strategic priorities driving sustainable revenue growth strategic acquisitions effective capital management & allocation 2. Growing diversified earnings base 3. Expect to meet performance objectives 28