#1Scotiabank Investor Presentation Third Quarter, 2005 July 31, 2005 1 Forward-looking statements 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 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. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intent," "estimate," "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; the accuracy and completeness of information the Bank receives on customers and counterparties; the timely development and introduction of new products and services; the Bank's ability to complete and integrate acquisitions; 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; 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; 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. 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.#2Scotiabank Scotiabank Third Quarter Overview Rick Waugh President & Chief Executive Officer 3 Performance highlights Solid results - - EPS: $0.77 vs. $0.71 last year - YTD EPS up 10% vs. 2004 - YTD ROE: 21.0% ■ Earnings well diversified across business lines ■ Strong capital ratios - Tangible Common Equity (TCE): 9.3% 4#3Scotiabank Growth across major business lines net income available to common shareholders, $ millions Scotiabank +13% 319 Q3/04 Q3/05 282 +11% +6% 234 211 200 189 Domestic International 5 45 22 Scotia Capital Other Exceeding 2005 performance targets ROE Q3/05 YTD Target 21.0% VS. 17-20% EPS Growth 10.3% VS. 5-10% Productivity 55.9% VS. <58% 6#4Scotiabank Performance Review Luc Vanneste Executive Vice-President & Chief Financial Officer 7 Scotiabank Solid year-over-year revenue growth $ millions (TEB) Impact of Stronger Canadian dollar Reported Revenue 2,766 +9% 77 2,532 2,689 +6% Q3/04 8 Q3/05#5Scotiabank Core margin remains unchanged Q3/05 vs. Q2/05 vs. Q3/04 Net interest margin 1.97% (10) bps (12) bps Canadian $ loans & deposits Lower dividends ACG 13 Other 9 (7) (1) (3) (7) 714 (4) (10) bps (12) bps Scotiabank $ millions Other income Broad-based growth vs. Q3/04 Change Q3/05 vs. Q2/05 Change Q3/05 vs. Q3/04 $ % $ % (14) (1) Underlying 131 13 6 Impact of Canadian dollar (38) (8) (1) Reported 93 9 8 Trading revenues 32 (9) 10 160 Retail brokerage 21 16 Deposit & Payment services 15 Card revenues 8 3 Mutual funds 7 1 Securitizations revenues 4 (25) 25 Securities' gains 3 Credit fees (10) 2 (8) Underwriting fees & other (2) (9) Other 15 (8) (1) 93 9 10#6Expenses well controlled Scotiabank $ millions Change Q3/05 vs. Q2/05 Change Q3/05 vs. Q3/04 $ % $ % 9 1 Underlying 51 3 14 Impact of new subsidiaries 14 4 Impact of Canadian dollar (20) 27 2 Reported 45 3 5 Professional fees / legal expenses 17 00 6 Advertising and promotion 8 3 Premises & technology 5 (9) Salaries & employee benefits (1) 8 Appraisal & acquisition fees (7) 14 Other 23 27 2 45 3 Scotiabank 65 60 55 50 60 11 Industry-leading productivity expenses as % of revenues 56.4 45 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 12#7Scotiabank $ millions Higher unrealized securities' gains Q3/05 Q2/05 Q3/04 - Emerging Market Debt 579 540 451 - Fixed Income 1 28 (2) - Equities 504 420 438 Scotiabank 12 10 13 1,084 988 887 Very strong capital ratios % of risk-adjusted assets 11.3 11.4 11.1 Tier 1 8 9.5 9.5 9.3 Tangible Common 60 Equity 4 2 ○ Q3/04 Q2/05 14 Q3/05#8Scotiabank Business Line Results 15 Business line net income summary Scotiabank net income available to common shareholders, $ millions Q3/05 Q2/05 Q3/04 Domestic 319 279 282 International 234 186 211 Scotia Capital 200 239 189 Other 22 118 45 Total 16 775 822 727#9Scotiabank $ millions Domestic Banking % ◉ Net income* --ROE 350 50 45 300 40 250 35 30 200 25 150 20 15 100 10 50 50 5 ◉ 0 0 Q3/04 Q2/05 Q3/05 * net income available to common shareholders 17 Net income of $319 million up 13% yr/yr, 14% qtr/qtr ROE of 31.2% Revenues up 5% yr/yr and qtr/qtr Expenses well controlled - 2% increase yr/yr 1% increase qtr/qtr Credit quality remains strong - lower provisions yr/yr, qtr/qtr - improvement in commercial Scotiabank Domestic - strong retail asset growth $ millions Year/Year ◉ Net-interest income Non-interest income Strong retail asset growth ■ 1,400 Retail market share gains: 13 bps 1,200 • 1,000 800 600 400 200 0 " Higher fees in several areas: -full-service brokerage · mutual funds cards Qtr/Qtr Revenue up 5% 3 more days in quarter Q3/04 Q2/05 Q3/05 ■ Retail asset growth 18#10Scotiabank $ millions International - strong asset growth % ◉ Net income* -ROE 250 40 200 150 100 50 35 30 25 20 20 15 10 Net income of $234 million up 11% yr/yr, 26% qtr/qtr up 21% yr/yr, excluding forex translation ROE of 24.1% Caribbean & Central America · strong retail asset growth 5 Latin America 0 0 Q3/04 Q2/05 Q3/05 * net income available to common shareholders 19 net income up yr/yr strong results at Scotiabank Inverlat Scotiabank $ millions International - revenues trending higher ◉ Total revenues up Net-interest income Non-interest income 800 700 600 500 400 300 200 100 0 Q3/04 Q2/05 Q3/05 ◉ - up 15% yr/yr - 21% excluding forex translation Net Interest Income - - - up 14% yr/yr excluding forex translation - higher margin and volumes in Inverlat - strong underlying growth in retail assets and deposits Other Income up 31% yr/yr, 36% qtr/qtr: 20 • higher Inverlat revenues • higher gains from bond sales#11Scotiabank Inverlat - another strong quarter Scotiabank contribution, $ millions ■ Contribution of $97 million 110 - up 36% yr/yr ■ROE of 29% Underlying revenues up 30% yr/yr - growth in retail & commercial lending - – higher margins and retail banking fees - partly offset by lower trading revenues Improving productivity ratio 62% vs. 69% in Q3/04 100 90 80 ☐ 70 60 50 40 30 20 10 0 Q3/04 Q2/05 Q3/05 Scotiabank 21 ☐ Consolidation of Banco de Comercio in El Salvador $1.4 billion in assets ■ 1,700 employees ■ Distribution network - 47 branches - 80+ ABMS - 18 remittance branches in the U.S. ■ Combined market share: 17%+ 22#12Scotiabank $ millions 250 200 Scotia Capital – steady revenues, - lower loan loss recoveries Net income of $200 million up 6% yr/yr, down 16% qtr/qtr ROE of 24.7% Lower loan loss recoveries qtr/qtr % - Net income* ROE 300 50 ◉ 45 40 ◉ 35 30 25 20 15 ◉ 10 5 0 0 Q3/04 Q2/05 Q3/05 150 100 50 net provision of $2 million vs. net recovery of $57 million Revenue down 2% yr/yr, 7% qtr/qtr Expenses down yr/yr and qtr/qtr lower performance-based compensation * net income available to common shareholders Scotiabank 23 Acquisition of Waterous & Co. Leading global energy advisory firm ■ Advised 24 of the world's 30 largest private sector oil & gas companies over past three years ■ Involved in more than US $15 billion in transactions since 2002 Synergies - expanded client relationships - one-stop financing for M&A clients 24#13Scotiabank $ millions 130 110 90 70 10 50 50 30 30 Net income* Other -10 Q3/04 Q2/05 Q3/05 10 10 * net income available to common shareholders ด Scotiabank Net income of $22 million Lower securities gains - Q2/05 included Shinsei investment gain of $118 million (pre-tax) Q3/04 included $50 million release of general allowance 25 Risk Review Warren Walker Executive Vice-President Global Risk Management 26 26#14Scotiabank Credit risk overview ▪ Lower gross impaired loans: $1.8 B - down $119 mm vs. Q2/05 ■ Lower net impaired loans: $573 mm (after specific allowance) ■ - down $93 mm vs. Q2/05 - down $625 mm vs. Q3/04 Specific provisions: $85 mm ― - up $50 mm vs. Q2/05 - down $15 mm vs. Q3/04 ■ No change to the General Allowance 27 Scotiabank $ millions Low net formations again this quarter Domestic - - Retail 50 50 - Commercial 11 61 International 9 Scotia Capital - U.S. (4) - Other 3 (1) Total 28 69#15Continuing positive trend in impaired loans Scotiabank $ millions 3,015 1,198 Q3/04 after specific allowance Gross Impaired Loans Net Impaired Loans* 2,200 2,028 1,882 1,763 879 762 666 573 Q4/04 Q1/05 Q2/05 Q3/05 29 Lower specific provisions year over year Scotiabank $ millions Domestic: Q3/05 Q2/05 Q3/04 63 66 70 24 21 26 2 International: Scotia Capital: - Canada - U.S. 1 - Europe E-22 (1) (11) (55) 20 (2) 19 (57) 28 Other Total (1) 85 35 100 30#16Scotiabank Low variability of trading revenue trading revenue, third quarter 2005 # days 16 14 12 10 8 6 4 2 0 0 1 2 3 $ millions 31 98%+ days = positive 4 5 6 7 8 Scotiabank Low market risk $ millions, May 1, 2005 to July 31, 2005 20 10 -10 -20 Actual P&L VaR 1 day ummum Average 1 day VaR = $7.7 mm 32#17Scotiabank Risk summary ■ Stable credit quality ■ Specific provisions for credit losses to be well below 2004 ■ Possible future reduction in general allowance ด Scotiabank 33 Outlook Rick Waugh President & Chief Executive Officer 34 =4#18Scotiabank Outlook ■ Solid quarter - challenges remain ■ Strength from diversification - - 3 growth platforms ■ Strong capital position - disciplined utilization for growth 35