#1Scotiabank Scotiabank Investor Presentation January 31, 2002 1 Overview of Q1/02 Results Peter Godsoe Chairman & C.E.O. 2#2Scotiabank Performance highlights ■ Net income of $52 million ■ $540 million after-tax charges for Argentina Excluding Argentine charges: ➤ Net income: $592 million ➤ EPS: $1.10 up 16% from Q1/01 ROE: 17.3% A Specific provisions: $850 million $350 million excluding Argentina Strong capital and reserves Tier 1: 9.2% ■ Dividend increase ➤ +3 cents to 37 cents/share Scotiabank 3 Argentina update Extremely difficult and uncertain environment Strong action taken this quarter ➤ $540 million after-tax charges A Goodwill of $76 million written off ➤ -70% reserved against cross-border exposure of $1.1 billion ■ Continue to closely monitor situation 4#3Scotiabank Strong underlying performance Net income, $ millions +20% 279 233 Domestic Q1/01 Q1/02 +52% 175* +22% 146 120 115 Scotia Capital * net loss of $(365) million after charges for Argentina Scotiabank ROE 5 International Performance versus targets Q1/02 Q1/02 Reported ex. Argentina Target 0.8% 17.3% VS. 15-17% EPS Growth (95)% 16% VS. 7-12% Productivity 56.7% 54.5% VS <58% Tier 1 9.2% 9.5% VS. 8%+ 6#4Scotiabank Consistent record of dividend increases 140 120 100 80 60 40 40 20 20 Annual dividend, cents/share 38¢ 1988 1990 * based on current rate Scotiabank $1.45 1992 1994 1996 1998 2000 2002* 7 Performance Review Sabi Marwah Executive Vice-President & Chief Financial Officer 8#5Scotiabank Solid earnings excluding Argentina Net Income $MM EPS ROE (Diluted $) (%) Reported $52 $0.05 0.8% 540 1.05 16.5% Special charges for Argentina Excluding Argentine charges $592 $1.10 17.3% Growth vs. Q1/01 +16% $0.15 +0.3% Scotiabank $ millions 9 Argentina charges Provision for credit losses Cross-border Scotiabank Quilmes Q1/02 2001 Total 187 - 187 313 50 363 500 50 550 Other income Loss on securities 20 40 60 Other (pesofication) 87 10 97 607 100 707 Taxes Total (67) (38) (105) 540 62 602 10#6$ Scotiabank Good top-line revenue growth $ billions 3 2 1 Q1/01 14% * excludes charges for Argentina Q1/02* 11 Other income Net interest income Changes in margin Scotiabank Net interest margin Increase/(decrease) due to: Inverlat $US funding spreads Other 12 Inc. vs. Q1/02 Q1/01 2.41% +18bp +10 +6 +2 +18bp#7Scotiabank $ millions Changes in other income Q1/02 Q4/01 change Q1/02 Q1/01 change 869 989 (12)% Reported 869 1,014 (14)% (107) (40) Argentina charges (107) 8 68 Gain on securities 8 73 Gains on sale of 65 businesses 37 40 Securitization revenues 37 ON 27 82 70 84 Inverlat 70 3 861 772 12% Underlying 861 829 4% Scotiabank 13 Tight control of base expenses Change in expenses Inverlat Performance-based compensation Change in base expenses 14 Q1/02 vs. Q1/01 $MM % 252 20% 208 16% 37 3% 7 1%#8Scotiabank 62 Continued productivity leadership expenses as % of revenues 58 54 56.7% 50 50 97 98 99 00 01 Q1/02 15 Taxes Scotiabank Q1/02 NIBT Taxes Tax Rate ($ millions) ($ millions) (%) Reported 241 146 61% Add: Argentina charges 607 67 11% Underlying 848 213 25% 16#9Scotiabank - Capital ratios – among best in industry % of risk-adjusted assets 14 12.1 12 13.0 12.7 Total 10 9.3 9.2 Tier 1 8 8.6 6 CO 4 Tangible Common 7.1 7.8 7.7 Equity 2 0 Scotiabank $ billions Q1/01 Q4/01 Q1/02 17 Higher reserves 2.2 2.0 Marketable 0.7 0.5 Securities 1.5 Q4/01 18 15 General Provision Q1/02#10$ Scotiabank Scotiabank Business Line Results 19 Strength in diversification Q1/01 International Domestic Domestic 25% 50% 25% Scotia Capital * excludes charges for Argentina 20 Q1/02 International* 29% 47% 24% Scotia Capital#11Scotiabank Domestic - steady upward performance Net income, $ millions $292 $279 * $233 * Solid asset growth yr/yr A Personal loans +6% Residential mortgages +7% Innovative products Scotia Line VISA ↑ 125+ bps Expenses well contained ➤ up 2.5% yr/yr Best of class retail risk profile PCL 22bps in Q1/02 Q1/01 Q4/01 Q1/02 * Q1: Gain on sale of Quebec branches; Q4 gain on sale of Corporate Trust Scotiabank 21 Growing Wealth Management ■ Mutual fund success A A assets +24% bank market share +98bps Expanding brokerage business acquisition of Charles Schwab Canada ➤ "ScotiaMcLeod Direct Investing" brand ■ New sales force 400 financial planners ■ 12 new private client centres 222 22#12Scotiabank Scotia Capital - solid quarter Net income, $ millions $120 $176 $146 Q1/01 Q4/01 Q1/02 " ◉ " Revenues up 12% yr/yr Global Trading up 52% ➤ Underwriting up 50%+ Lending down 6% Provision for credit losses up vs. Q4/01 mainly U.S. Expenses higher performance-related compensation 23 International - good earnings ex. Argentina Scotiabank Net income, $ millions * $115 $175* ■ Caribbean net income up 10% yr/yr ◉ Asia $93 improved performance ◉ Latin America A Q1/01 Q4/01 Q1/02 net loss of $(365) million after charges for Argentina 24 Inverlat contributed $23 million#13Scotiabank Ongoing growth from Caribbean Net income, $ millions 250 CAGR = 20% 200 150 100 50 " $252 0 92 93 94 95 96 97 98 99* 00 01 Business growth A growing share with existing 2 million customers acquired Citibank's VISA portfolio (Bahamas) Continued delivery channel expansion A new branches in Dominican Republic & Puerto Rico ATMS: +6% qtr/qtr Strong emphasis on technology sales delivery platform ➤ credit behaviour scoring excludes real estate gains in 1999 net income Scotiabank 25 Mexico - growing the franchise Scotiabank Inverlat GRUPO FINANCIERO ■ 1 million retail/commercial customers Strong lending and deposit growth retail lending +24% A commercial/corporate loans +34% deposits +42% Excellent growth in internet channel internet transactions +300% yr/yr Scotia Fondos VOLKSWAGEN Scotia enLinea Empresari@l 26#14$ Scotiabank Scotiabank Risk Review John Crean Senior Executive Vice-President Global Risk Management 27 Risk Overview Large provisions against Argentina specific provisions of $500 million net impaired loans of $475 million ■ Net impaired loans (ex. Argentina) up slightly ➤ $195 million in Q1/02 vs. $154 million in Q4/01 ■ Continued high level of provisioning $350 million in specific provisions (ex. Argentina) ➤ mainly U.S. 28#15Scotiabank Impaired loan formations in Q1/02 $ millions Scotia Capital (mostly U.S.) 308 Domestic 65 International 100 473 Argentina Scotiabank Quilmes* 621 Cross-border 309 930 Total * Before impact of devaluation and pesofication ($124 million) 1,403 29 Scotiabank Trend in impaired loans Net impaired loans, $ millions 1084 696 Q1/01 Q2/01 * Argentine net impaired loans 670 395 475* 259 105* Q3/01 Q4/01 Q1/02 30#16Provisions Scotiabank Specific provisions, $ millions Q1/02 Q4/01 Q1/01 Scotia Capital 260 157 292 Domestic 65 57 58 International 25 86 50 350 300 400 Argentina 500 50 850 350 400 31 Scotiabank Argentina - large provisions established cross-border exposure before provisions noted below, January 31, 2002, $ millions Brady Bonds 140 Trade/Interbank 125 Corporate/Other 487 Scotiabank Quilmes 308* 1,060 Provisions Net cross-border exposure * carrying value of investment before provisions (707) 353 32#17Scotiabank Cable & Telecom exposure Loans & acceptances, $ millions, January 31, 2002 Investment Non-Investment Sector* Grade Grade Total Cable operators 351 1,277 1,628 Regulated telephone 855 51 906 Unregulated telephone/wireless 360 1,170 1,530 Long-haul fibre cable 162 124 286 CLECS 199 199 Total 1,728 2,821 4,549 Net impaired loans: $60 million * no Paging exposure 33 Scotiabank # days Low variability of trading revenue... Net trading revenue, first quarter 2002 10 9 8 7 6 5th percentile 95th percentile 5 I 4 I 3 2 1 0 (7) (5) (3) (1) 0 1 3 5 $ millions 7 9 11 13 15 17 34#18Scotiabank ...reflecting moderate market risk $ millions, November 1, 2001 to January 31, 2002 Scotiabank 20 10 -10 -20 35 Actual P&L VaR 1 day Risk management summary Domestic Retail and commercial in excellent shape International Caribbean & Asia: good ■ Latin America: stable excluding Argentina Argentina: reserved Scotia Capital ■ Canada & Europe: good shape U.S. softness for most of 2002 Specific Provisions Forecasting same level as 2001 (excluding Argentina) 36#19$ Scotiabank Scotiabank Outlook Peter Godsoe Chairman & C.E.O. 37 Outlook for 2002 ■ Economic outlook ■ ■ ■ A - Expect North American pick-up second half of 2002 · Expect global recovery in 2003 Aggressively managing credit portfolios Argentina - monitoring closely Expect to meet performance targets (ex. Argentina) A EPS: 7-12% ► ROE: 15-17% A 38#20Scotiabank 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. 39