#1Investor Presentation tiabank nium Ba THIRD QUARTER 2016 Scotiabank®#2Disclaimer and Caution Regarding Forward-Looking Statements Disclaimer This presentation is only for wholesale investors and represents information of a public nature. It does not constitute an invitation, offer, solicitation or inducement to buy or sell any securities of The Bank of Nova Scotia in any jurisdiction. This presentation does not constitute investment advice or any form of recommendation, and should not be construed as such. Caution Regarding Forward-Looking Statements Our public communications often include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may include, but are not limited to, statements made in this document, the Management's Discussion and Analysis in the Bank's 2015 Annual Report under the headings "Overview-Outlook," for Group Financial Performance "Outlook," for each business segment "Outlook" and in other statements regarding the Bank's objectives, strategies to achieve those objectives, the regulatory environment in which the Bank operates, anticipated financial results (including those in the area of risk management), and the outlook for the Bank's businesses and for the Canadian, U.S. and global economies. Such 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," "may," "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. Do not unduly rely on forward-looking statements, as a number of important factors, many of which are beyond the Bank's control and the effects of which can be difficult to predict, 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 and funding; significant market volatility and interruptions; the failure of third parties to comply with their obligations to the Bank and its affiliates; changes in monetary policy; legislative and regulatory developments in Canada and elsewhere, including changes to, and interpretations of tax laws and risk-based capital guidelines and reporting instructions and liquidity regulatory guidance; changes to the Bank's credit ratings; operational (including technology) and infrastructure risks; reputational risks; the risk that the Bank's risk management models may not take into account all relevant factors; 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; critical accounting estimates and the effects of changes in accounting policies and methods used by the Bank (See "Controls and Accounting Policies-Critical accounting estimates" in the Bank's 2015 Annual Report, as updated by this document); 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; fraud by internal or external parties, including the use of new technologies in unprecedented ways to defraud the Bank or its customers; increasing cyber security risks which may include theft of assets, unauthorized access to sensitive information or operational disruption; consolidation in the Canadian financial services sector; competition, both from new entrants and established competitors; judicial and regulatory proceedings; natural disasters, including, but not limited to, earthquakes and hurricanes, and disruptions to public infrastructure, such as transportation, communication, power or water supply; the possible impact of international conflicts and other developments, including terrorist activities and war; the effects of disease or illness on local, national or international economies; 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 "Risk Management" section starting on page 66 of the Bank's 2015 Annual Report. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2015 Annual Report under the heading "Overview-Outlook," as updated by this document; and for each business segment "Outlook". The "Outlook" sections are based on the Bank's views and the actual outcome is uncertain. Readers should consider the above-noted factors when reviewing these sections. The preceding list of factors is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank's results. When relying on forward-looking statements to make decisions with respect to the Bank and its securities, investors and others should carefully consider the preceding 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 its behalf. 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. 2 Scotiabank®#3Table of Contents Scotiabank Overview........... Scotiabank Strategy & Financial Objectives Key Strategic Priorities Medium-Term Financial Objectives Scotiabank Business Line Overview - - Canadian Banking........... International Banking...... Wholesale Banking.. Scotiabank Key Issues - - Energy Exposure.... Digital Focus.... 4 9 10 12 231 13 14 - Domestic Retail Exposure......... Canadian Household Debt. Scotiabank Track Record..... Funding ..... Canadian Covered Bonds Appendix 1: Canada & Select International Economies.... Appendix 2: Canadian Housing Market................ Appendix 3: Tangerine Overview Appendix 4: Latin America Overview 16 17 18 19 20 23 27 32 37 41 43 3 Scotiabank®#4Scotiabank Overview 4 Scotiabank®#5Canada's International Bank Franchise in attractive markets History Global footprint in over 55 countries Established on east coast of Canada in 1832 In U.S. and Caribbean 125+ years Representative offices in Asia and Latin America since 1960's Began expanding Caribbean presence into Central and South America in 1990's. Primary focus in the region is on the countries of Mexico, Peru, Colombia and Chile As at Q3 2016 (C$)1 Scotiabank Scotiabank Credit Ratings4 Total Assets $907B CET1 Risk Weighted Assets $358B Moody's S&P Fitch DBRS Market Capitalization $80B Senior Rating Aa3 A+ AA- AA Q3/16 Net Income $1,959M Outstanding Not ROE 14.8% Covered Aaa AAA AAA Rated Bonds Productivity Ratio² 52.8% Outlook Negative Stable Stable Negative Capital Ratio³ 10.5% # of Employees 88,783 (1) Adjusts for restructuring charge of $278 million after-tax ($378 million before-tax) (2) Taxable Equivalent Basis (3) Basel III "all-in" Common Equity Tier 1 Ratio (4) A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revisions or withdrawals at any time 5 Scotiabank®#6Diversified and Profitable Businesses Business Line Earnings¹ International Banking • • Well diversified across business segments Approximately 80%+ from stable, high quality personal and commercial banking earnings in Canada and International markets International Banking representing 28% of earnings, are in regions with higher growth potential (Appendix 4), such as the Pacific Alliance countries of Mexico, Peru, Chile and Colombia 28% Global Banking and Markets 22% 50% Canadian Banking Personal & Commercial Banking (78%) Geographic Segment Average Assets¹ ■Canada - Mexico, Peru, Chile and Colombia 18% represent two thirds of International ■U.S. (Wholesale) 9% Banking earnings 59% ■Pacific Alliance 14% Global Banking and Markets accounting for 22% of the Bank's earnings ■Other International Diversified by products, customers and geographies, creating stability and lower risk Centralized control over key functions: capital, expense and risk management (1) Reflects Q3/16 results and excludes Other segment (2) Pacific Alliance includes Mexico, Peru, Colombia and Chile 6 Scotiabank®#7Financial Highlights - Q3/16 Net Income of $2.0 billion increased by 6% Y/Y Net Income ($m) · Strong results across all three business lines 2,000 1,959 Canadian Banking net income of $930 million, 1,950 (1) increased by 8% Y/Y 1,900 1,862 1,847 1,843 1,850 1,814 International Banking net income of $527 million, 1,800 increased by 9% Y/Y 1,750 1,700 Global Banking and Markets net income of $421 million, increased by 12% Y/Y Q3/15 • Revenue growth of 8% Y/Y, driven by volume growth and higher non-interest income Q4/15 Q1/16 Q2/16 Q3/16 Productivity Ratio (2) 58% 56.1% Expenses growth up 5% Y/Y, driven by continued 56% 54.4% 53.6% 54% investment in strategic initiatives reflecting higher technology and professional costs (1) 52.8% 52.2% 52% 50% · Productivity (2) decreased by 160 basis points to 52.8% 48% - Positive operating leverage YTD Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 • Credit trends improved from peak levels last quarter PCL Ratio - PCL ratio (3) decreased by 12 basis points to 47 bps 0.75% (3) 0.59% GIL ratio increased by 4 basis points to 1.10% 0.60% 0.47% 0.45% 0.42% 0.42%¹ Capital remains strong with a Tier 1 Capital Ratio of 10.5% 0.45% ~$1.0 billion in internal capital generation 0.30% 0.15% Leverage ratio of 4.2% 0.00% (1) Adjusts for restructuring charge of $278 million after-tax ($378 million before-tax) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 (2) Effective Q3/16, the taxable equivalent adjustment is no longer included in the calculation. Prior period amounts have been restated for all the banks. 7 Scotiabank® (3) Adjusts for collective allowance increase; including collective allowance increase, All Bank PCL ratio was 0.64%#8Scotiabank Strategy & Financial Objectives 8 Scotiabank®#9Key Strategic Priorities Customer Focus Leadership Low Cost by Design Digital Business Mix 9 Scotiabank®#10Medium-Term Financial Objectives Metric All Bank EPS Growth ROE Operating Leverage Capital Canadian Banking (Investor Day - April 2014) Net Income Growth International Banking (Investor Day - January 2016) Net Income Growth Objectives Q3/16 YTD 5-10% 14%+ 5.0% 14.3% Positive 1.6% Maintain strong ratios 10.5% 10 7-9% 11.0% 8-10% 13.6% Scotiabank®#11Scotiabank Business Line Overview 11 Scotiabank®#12Our Businesses - Canadian Banking Personal & Commercial Banking, Wealth and Insurance Business Overview • Full suite of financial advice and banking solutions to retail, small business and commercial customers • • Investment, pension and insurance advice and solutions . Business Performance Q3/16 Highlights 50% of consolidated net income Net income up 8% Y/Y • . Higher NIMs (+13 bps Y/Y) Double digit growth in credit cards and auto lending Retail chequing was up 9% and savings deposits were up 14% Positive operating leverage • Revenue mix: retail (57%), wealth (26%), commercial (17%) • • Average loan mix: residential mortgage (61%), personal & credit card loans (25%), business and government loans & acceptances (14%) 2016 Priorities Improve customer service by transforming the distribution network, streamlining customer journeys, and offering customized advice & solutions Enhance business mix by driving continued growth in Commercial Banking, credit cards and core deposits • Expand Tangerine and position to become leading everyday bank in Canada . • Grow & diversify Wealth Management • Reduce structural costs to deliver sustained cost savings and invest in our business and technology, drive customer experience excellence and drive greater efficiency (1) Including the gain on sale of a non-core lease financing business for $100 million after-tax ($116 million pre-tax) 12 Key Data In C$ Total Loans (avg.) $303B Total Deposits (avg.) Net Income Productivity Ratio Branches $224B $930MM 51.5% 997 # of Employees 25,436 Net Income ($m) 1,000 977(1) 930 900 863 875 837 800 700 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Scotiabank®#13Our Businesses - International Banking • Personal & Commercial Banking, Wealth and Insurance Business Overview Business Performance Q3/16 Highlights 28% of consolidated net income • Operate primarily in Latin America (Mexico, Peru, Chile and Colombia), Central America and the Caribbean, with full range of personal and commercial financial services as well as wealth products and solutions • Net income up 9% Y/Y (1) • Revenue mix: Latin America (65%), Caribbean & Central America (31%), Asia (4%) • . • • . Average loan mix: residential mortgage (26%), personal & credit card loans (22%), business and government loans & acceptances (52%) 2016 Priorities Improve retail customer experience to maintain customer relevancy and loyalty Invest in Mexico to drive growth, build greater relevance and presence, and strengthen our foundational capabilities in this key market Target higher profitability business across the Pacific Alliance Countries to become the primary bank in selected segments Streamline our operational infrastructure to be better organized to serve our customers, achieve structural cost reductions and consolidate our operations to drive greater efficiency . • Strong loan, deposit and fee income growth Ex. FX translation, total loans were up 11% (Latin America up 14%) and total deposits were up 17% Positive operating leverage Key Data Total Loans (avg.) Total Deposits (avg.) In C$ $102B Net Income Productivity Ratio Branches $87B $527MM 55.5% 1,823 # of Employees 51,972 Net Income ($m) 550 527 504 505 500 500 485 450 LU Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 (1) Excludes affiliates, includes Mexico 13 Scotiabank®#14Our Businesses - Global Banking and Markets Wholesale Banking Business Overview Wholesale banking and capital markets products to corporate, government and institutional clients • • Full service platform in Canada and Mexico. Niche focus in U.S., Central and South America, Asia, Australia and select markets in Europe Revenue mix: Business Banking (53%), Capital Markets (47%) Business Performance Q3/16 Highlights • 22% of consolidated net income Net income up 12% Y/Y Strong loan growth across Canada, U.S. and Europe Higher contributions from fixed income, corporate and investment . 2016 Priorities Enhancing customer focus to improve coverage and deepening relationships Leveraging our global footprint to grow our business in Latin America (particularly the Pacific Alliance), and in Asia and Australia in select markets • Strengthening our data and analytics capabilities Focusing on strategic sectors through our businesses and geographies on the key sectors of Energy, Mining, Infrastructure and Financials . • Improving efficiency and effectiveness banking and precious metals Partly offset by higher PCLS Key Data In C$ Total Loans (avg.) $81B Trading Assets (avg.) $98B Total Deposits (avg.) $80B Net Income Productivity Ratio $421MM 44.0% 2,587 Net Income ($m) 600 421 375 366 400 325 323 200 0 # of Employees 14 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Scotiabank®#15Scotiabank Key Issues 15 Scotiabank®#16Key Issues - Energy Exposures . Energy exposure is well diversified across sectors and geographies $16.1B drawn energy exposure, is 3.3% of the Bank's total loan book - Down 1% Q/Q ~52% is investment grade $11.9B of undrawn energy exposure, up 4.4% Q/Q ~69% is investment grade PCLs of $37 million in Q3/16, decreased by $113 million from last quarter Cumulative energy loan losses for 2015 to 2017 at low end of guidance Actively managing exposures to select non-investment grade E&P and Services accounts Approximately two-thirds of focus accounts have issued debt ranking below the Bank's senior position The Bank continues to evaluate exposures and conducts stress tests at current and realistic oil prices with consideration of secondary impacts Drawn Energy Exposure by Sector E&P 10% 13% Midstream 52% Downstream 25% Services Drawn Energy Exposure by Geography¹ Canada 36% 42% U.S. • The stress tests indicate that any potential losses are very manageable and within our risk expectation Other² 22% (1) By country of residence (2) Other includes Latin America, Asia and Europe 16 Scotiabank®#17Key Issues - Digital Focus • . One of the Bank's key strategic priorities is digital transformation and management has already embarked on a number of related initiatives Embarked on a number of "Rapid Labs" to reduce pain points in key business processes including Mortgages, Credit Cards, Day to Day Banking, Branches, Small Business and Wealth Opening a digital factory in 2H/16 to house our data scientists, data analytics and digital teams Piloting new branch formats that centralize around advice Implementing Agile processes across the Bank In addition, Tangerine provides the Bank with a key competitive advantage as a low-cost, scalable digital bank Direct everyday savings bank with a chequing • account and newly launched credit card "Innovation incubator" that can prove technologies before deploying across Scotiabank Highest ranking by J.D. Power House for customer satisfaction (Net Promoter Score of 80) 2 million customers (attractive client profiles) and 12 million direct ready Canadians Over 90% of Tangerine clients are non-Scotiabank clients MORTGAGE Rapid Labs ■ Over half of applicants able to complete full process in a single branch visit Processing time for each application reduced by ~40% DAY-TO-DAY 10 ■ Re-invented and streamlined customer experience (e.g., online authentication, instant enrollment in online banking) ■ Time to access account online reduced from 2 weeks to < 10 minutes SMALL COMPANIES ■ First-in-Canada account- opening process without an in-person visit ■ Customer turn-around time reduced from multiple week to minutes CREDIT CARDS D Fastest credit card application and fulfillment process in Canada ■ More than doubled the website yield rate BRANCH ■ The time to open a new 品 account in the branch will be cut in half ⚫ Will provide a seamless cross-sell and multi- product experience ■ Will have instant enrollment to online banking WEALTH ■ Will move from a very manual process to a fully digital experience ■ Time to open an account will reduce from ~1 week to 1 day ■ Processing time for an app- lication will be cut in half 17 Scotiabank®#18Key Issues - Domestic Retail Exposures • Portfolio is ~$263 billion (~93% secured - 81% real estate and 12% auto) Real estate is diversified with a high level of insured mortgages (59%), while uninsured has significant equity (~50% LTV) Credit card portfolio is approximately $6.8 billion, reflecting ~2.6% of Domestic retail loan book or 1.4% of the Bank's total loan book • Organic growth strategy that is focused on payments and deepening customer relationships ~80% of growth is from existing customers (penetration rate low-30s versus peers in the low-40s) Strong risk management culture with specialized credit card teams, customer analytics and collections focus Auto Loan book is approximately $32 billion . Market leader and portfolio is structurally different than peers with 10 OEM relationships (8 are exclusive) Lower credit loss experience because: Higher mix of new versus used auto sales Higher mix of subvented business Domestic Retail Loan Book 4% 3% 12% Real Estate Secured Lending Auto I Cards 81% Other Canadian Banking - Risk Adjusted Margin 2.20% Lending terms have been declining with contractual terms averaging 72 months but effective terms are 48 months 2.15% 2.10% Alberta retail loan book is approximately $39.6 billion or 15% of the Domestic retail loan book 2.05% • • No signs of material credit stress or drawdown on lines Credit trends have moved up to/through national levels Majority of exposure is residential (65% insured) 2.00% Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 18 Scotiabank®#19• Key Issues - Canadian Household Debt Household debt has been increasing since the mid-1980's - Low interest rates, demographics (including immigration), financial innovation and shift in consumer attitude/behaviour - Driven largely by increasing mortgage debt • • Media/industry participants largely focus on a "flawed❞ metric "Household debt to income" ratio mixes a "stock" or debt with "flow" or disposable income => put another way, no one expects a borrower to pay off all their debt with one year's income Other key considerations around consumer indebtedness and consumer resilience to shocks: Housing affordability - Debt service ratios are at all-time lows - Canada ranks among the best against other developed countries as per McKinsey Net worth -Net asset levels (assets less debt) are also near all-time highs ■ About half of those assets are financial (not just real estate) ■ Asset growth has outpaced debt growth Interest rate shocks - Despite outlook for higher rates in time, there are mitigating factors ■ ■ Many Canadians take advantage of prepayment options (interest is not tax deductible in Canada) Canadians have substantial equity in homes " Variable rate borrowers can "fix" their mortgage if rates rise ■ Variable rate borrowers are adjudicated at the posted 5-year fixed rate Unemployment rate - a key driver of delinquencies and losses (given borrowers ability to pay debt) ■ Levels are expected to remain fairly stable over the next 2-3 years 19 Scotiabank®#20Scotiabank Track Record 20 20 Scotiabank®#21Solid Track Record of Earnings and Dividend Growth Earnings Per Share (C$)1, 2 Focused strategies to drive long-term growth Canadian Banking: Target 7-9% earnings growth and 400bps improvement in productivity ratio Focused on customer experience, business mix shift and distribution network/digitization to improve costs International Banking: Target 8-10% earnings growth and positive operating leverage - Attractive, higher growth and underpenetrated banking markets Global Banking and Markets Current earnings reflect trough levels and focused on strategic agenda Dividend per Share (C$) Strong track record of consistent dividends (and increases) with a current yield of approximately 4.5% The Bank has never cut its dividend Dividend increases are driven in line with earnings growth and subject to Board approval Dividend payout ratio target range of 40- 50% Current quarterly dividend of $0.74 per share implies a dividend payout ratio of ~48% The Bank has strong capital levels to support capital initiatives including dividend increases and share buybacks $3.05 5.67 4.43 $1.92 2.72 2.14 08 09 10 11 12 13 14 15 Q3/16 08 09 10 11 12 13 14 15 Q3/16 YTD YTD (1) (2) Reflects adoption of IFRS in Fiscal 2011 Excludes notable items 21 Scotiabank®#22Why Invest in Scotiabank? • • • A unique, stable, straightforward and successful bank model • • • Diversified by business and geography providing long-term sustainable earnings Approximately 80% of earnings from stable retail, commercial and wealth management businesses Strong risk management culture in Canada, with the growth potential of International Clearly defined strategy and well positioned for growth • Focused on organic growth across business lines, with the potential for select tuck-in acquisitions across existing markets that make the Bank better Significant potential for synergies across a clearly defined restructuring program and digital initiatives, including Tangerine The Bank has significant history in Latin America which is expected to provide better and more attractive growth prospects over the long-term Attractive valuation on a P/E and P/B basis, relative to peers • • Strong track record of delivering consistent earnings and dividend growth Dividend yield in the mid-single digits and dividend has never been cut • Mid-teens ROEs and strong capital levels 22 22 Scotiabank®#23Funding 23 Scotiabank®#24Funding Strategy Build core deposits in all of our key markets Achieve appropriate balance between cost and stability of funding Maintain pricing relative to peers Diversify funding by type, currency, program, tenor and markets Regular issuance in all markets executed via wholesale funding centers in Toronto, New York, London and Singapore • Funding strategy and associated risk management are managed centrally from Toronto within framework of policies and limits approved by Board of Directors For countries where we operate a branch banking subsidiary, strategy is for it to be substantially self-funded in the local market 24 24#25Wholesale Funding Composition Wholesale Funding Diversified by Instrument and Maturity¹ Subordinated Debt5 Deposits from Banks² Mortgage Securitization4 2% 4% Covered Bonds 8% Asset Backed 10% Securities 1% 30 34% Bearer Deposit 20 20 Medium Term Notes and Deposit Notes 34% 4% ABCP3 Notes, Commercial Paper & Certificate of Deposits 10 10 $ CDE, BN Maturity Table (ex-Sub Debt)6 < 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years > Senior Debt ABS Covered Bonds 1) Wholesale funding sources exclude repo transactions and bankers acceptances, which are disclosed in the contractual maturities table in the MD&A of the Interim Consolidated Financial Statements. Amounts are based on remaining term to maturity. 2) Only includes commercial bank deposits raised by Group Treasury. 3) Wholesale funding sources also exclude asset-backed commercial paper (ABCP) issued by certain ABCP conduits that are not consolidated for financial reporting purposes. 4) Represents residential mortgages funded through Canadian Federal Government agency sponsored programs. Funding accessed through such programs does not impact the funding capacity of the Bank in its own name. 5) Although subordinated debentures are a component of regulatory capital, they are included in this table in accordance with EDTF recommended disclosures. 6) As per Wholesale Funding Sources Table in MD&A. As of Q3/16. 25#26Diversified Wholesale Funding Programs Short-Term Funding USD 25 billion Bank CP program • USD 3 billion Subsidiary CP program CD Programs (Yankee/USD, EUR, GBP, AUD, HKD) Term Funding & Capital • CAD 7 billion ABS shelf (unsecured lines of credit) • . • CAD 5 billion ABS shelf (credit cards) CAD 15 billion shelf (senior debt, preferred shares, subordinated debt, common equity) Canada Mortgage Bonds and Mortgage Back Securities USD 3 billion Singapore MTN program AUD 4 billion Australian MTN program USD 25 billion global registered covered bond program (uninsured Canadian mortgages) USD 25 billion shelf (senior notes, preferred shares, subordinated debt, common equity) USD 20 billion global public covered bond shelf (in run-off, CMHC insured mortgages) USD 20 billion EMTN shelf 26#27Canadian Covered Bonds 27#28Scotiabank's Covered Bond Program Global Program • USD 25 billion global registered covered bond program (uninsured Canadian mortgages) Active in multiple currencies: USD, EUR, GBP and AUD Covered Bond Legislation • Framework passed into law in 2012 • Only uninsured mortgages allowed Statutory protection for the covered bond investor and, as a result, in the event of issuer default, increased certainty for investors with respect to the cover pool of collateral Extensive regulatory oversight and pool audit requirements Mandatory property value indexation • Established high level of safeguards and disclosure requirements 28 28#29Canadian Legislative Covered Bonds (CMHC Registered) Issuance Framework Eligible Assets Mortgage LTV Limits • Canadian Registered Covered Bond Programs' Legal Framework (Canadian National Housing Act) • Canadian Registered Covered Bond Programs Guide issued by Canada Mortgage and Housing Corporation (CMHC) Uninsured loans secured by residential property ⚫LTV limit of 80% Basis for Valuation of Mortgage Starting in July 2014, issuers are required to index the value of the property underlying mortgage loans in the Collateral covered pool while performing various tests Substitute Assets Substitute Assets Limitation • Securities issued by the Government of Canada • Repos of Government of Canada securities having terms acceptable to CMHC • 10% of the aggregate value of (a) the loans (b) any Substitute Assets and (c) all cash held by the Guarantor Cash Restriction Coverage Test Credit Enhancement Swaps Market Risk Reporting • The cash assets of the Guarantor cannot exceed the Guarantor's payment obligations for the immediately succeeding six months • Asset Coverage Test • Amortization Test • Overcollateralization ⚫ Reserve Fund • Prematurity Liquidity •Covered bond swap, forward starting • Interest rate swap, forward starting • Valuation calculation Mandatory property value indexation Covered Bond Supervisory Body • CMHC Requirement to Register Issuer and Program Registry Disclosure Requirements • Yes; prior to first issuance of the covered bond program • Yes • Monthly investor report with prescribed disclosure requirements set out by CMHC • Investor reports must be posted on a program website • Required to meet disclosure requirements in the jurisdictions in which the program is registered (US) or listed (UK) 29#30Scotiabank Registered Covered Bond Program Issuer Guarantor Guarantee Status Program Size Ratings The Bank of Nova Scotia Scotiabank Covered Bond Guarantor Limited Partnership Payment of interest and principal in respect of the covered bonds will be irrevocably guaranteed by the Guarantor. The obligations of the Guarantor under the Covered Bond Guarantee constitute direct obligations of the Guarantor secured against the assets of the Guarantor, including the Portfolio The covered bonds will constitute legal, valid and binding direct, unconditional, unsubordinated and unsecured obligations of the Bank and will rank pari passu with all deposit liabilities of the Bank without any preference among themselves and at least pari passu with all other unsubordinated and unsecured obligations of the Bank, present and future US$25bn Aaa/AAA/AAA (Moody's / Fitch / DBRS) First lien uninsured Canadian residential mortgage loans Cover Pool Asset Percentage 93% (7% minimum overcollateralization) Law Ontario, Canada SEC Registered Issuance Format 144A/Reg S (UKLA Listed) 30 30#31Portfolio Details: Scotiabank Global Registered Covered Bond Program¹ Loan-to-value Ratios² 1% .5% Credit Scores 2% 3% 9% 7% ■599 and Below ■0% - 20% 21% ■600 - 650 33% ■20%-40% 14% ■651 - 700 ■40%-60% ■701 - 750 ■60%-80% 54% ■751 - 800 ■80% and Above 20% ■801 and Above 40% Remaining Term Distribution Provincial Distribution 3% 2% 3% 2% 2% 17% 15% 28% ■Less than 12.00 12.00-23.99 8% ■24.00 35.99 36.00 41.99 ■42.00 47.99 10% 29% 48% 22 (1) As at July 28,2016 (2) Uses indexation methodology as outlined in Footnote 1 of the Scotiabank Global Registered Covered Bond Monthly Investor Report 31 ■ Alberta 17% ■British Columbia ■ Ontario ■Quebec ■Manitoba ■New Brunswick ■Newfoundland ■Nova Scotia ■Saskatchewan#32Appendix 1: Canada & Select International Economies 32 Scotiabank®#33Canadian Economy and Financial System Canadian Economy The 15th largest economy in the world, with a large export orientation Economy is diversified, with a focus on service, primary, manufacturing, construction and utility industries Proactive governments and central bank Manageable Canadian government deficits Moderate growth with slowdown in commodity sectors balanced by continuing manufacturing, service sector, construction, and manufacturing activity Strong Financial System Effective regulatory framework Principles based regime - - Single regulator for major banks Conservative capital requirements Proactive policies and programs Risk management practices - - - - Conservative lending standards Few sub-prime mortgages Relatively little securitization Primarily originate to hold model Canadian banks well capitalized and profitable Canadian Banking System ranked World's Soundest by World Economic Forum for 8th consecutive year Global Competitiveness Report (2015-2016) 33#34Canadian Economy Real GDP Growth annual % change 3 2 1 0 U.S. U.K. Euro zone Canadian GDP by Industry May 2016 12.1% ■2000-2014 15.0% ■2015-2016F 20.4% 4.4% 5.4% 6.6% 6.9% 11.4% 7.3% 10.4% Canada Japan Source: Statistics Canada, Scotiabank Economics. Finance, Insurance & Real Estate Health & Education Wholesale & Retail Trade Manufacturing Mining and Oil & Gas Extraction Construction Public Administration Professional, Scientific & Technical Services Transportation & Warehousing Other Forecasts as at August 3, 2016. Source: Scotiabank Economics. General Government Net Financial Liabilities Government Financial Deficits 133.1 1 0.6 60 40 86 140 % of GDP 120 100 80 128.5 0 -1 88.5 80.8 75.5 71.2 -2 -1.7 -3 -2.6 40 43.7 31.8 -4 -3.6 -3.7 -4.4 20 20 -5 % of GDP -5.2 -6 0 Canada Germany OECD France U.K. U.S. Japan Italy Germany Canada Italy France U.S. U.K. Japan Source: OECD (2015 estimates); Scotiabank Economics. As at August 26, 2016. Source: IMF (2015 estimates), Scotiabank Economics. As at August 26, 2016. 34#3514 % 12 Stable Economic Fundamentals Canada Modest economic growth alongside persistent weakness in commodity prices and sluggish exports abroad Household spending remains reasonably buoyant, underpinned by relatively low and stable unemployment as well as low borrowing costs Population and labour force growth supported by strong immigration Stable inflation within Bank of Canada target band 6 y/y % change 5 4 3 2 1 0 -1 -2 00 02 04 90 06 Inflation 08 80 Bank of Canada Target Inflation Band Canada 10 12 Source: Statistics Canada, BLS, Scotiabank Economics. Data through July 2016. U.S. 14 16 35 4 2 0 10 Unemployment Rate Canada 8 6 90 92 94 96 98 00 02 04 06 08 10 12 Source: Statistics Canada, BLS, Scotiabank Economics. Data through July 2016. Labour Force Participation Rate 2 2 3 3 2222 61 60 90 62 65 64 63 70 % 69 68 67 66 92 92 94 96 98 00 00 02 42 . 04 06 90 80 08 Source: Statistics Canada, BLS, Scotiabank Economics. Data through July 2016. U.S. U.S. 14 16 Canada 10 12 14 16#36Economic Outlook in Key Markets Canada / U.S. 2016 and 2017 Real GDP Growth Forecast Scotiabank's Key International Markets 1.2% 2.0% 1.5% 2.2% 2.8% 2.8% 2.4% 2.3% 2.0% 1.7% 3.8% 3.6% Canada Canada U.S. 2016 2017 2016 U.S. 2017 Chile Chile 2016 2017 Mexico 2016 Mexico 2017 2016 Colombia Colombia 2017 Peru Peru 2016 2017 No Significant Exposure to the BRICS Source: Scotiabank Economics, as of August 3, 2016 36#37Appendix 2: Canadian Housing Market 37 Scotiabank®#38Canadian Housing Fundamentals Remain Sound Steady population and household income gains, low interest rates and continuing immigration are underpinning demand High household debt supported by continuing low debt service costs, low unemployment and significant home equity Unemployment rate remains low and stable Structural considerations, strong underwriting discipline and conservative lending policies are reflected in low delinquency rates Affordability strain observed in select markets 1.0 Residential Unit Sales to New Listings ratio 0.9 0.8 Seller's Market 0.7 0.6 0.5 Balanced Market 0.4 0.3 Buyer's Market 0.2 0.1 0.0 90 92 94 96 98 00 02 04 06 08 Source: CREA MLS, Scotiabank Economics. Data through July 2016. 10 12 14 16 Mortgage Debt Service Ratio 7 % of disposable income 6 High Percentage of Equity Residential Mortgages Arrears 6 80 real estate equity as % of % of mortgages in arrears Canada real estate assets 3 months or more 75 5 70 Mortgage Interest Payments 4 65 LO 5 4 3 2 1 40 0 35 GG OG 60 55 50 45 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Source: Statistics Canada, Scotiabank Economics. Data through 2016Q1. U.S. 3 2 1 0 U.S. Canada 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Source: Statistics Canada, U.S. Federal Reserve, Scotiabank Economics. Data through 2016Q1. 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Source: CBA, MBA, Scotiabank Economics. Data through 2016 Q2. 38#39Scotiabank's Canadian Residential Mortgage Portfolio . • • Mortgage business model is originate to hold 59% of the mortgage portfolio is insured 41% is uninsured and has an average loan-to-value (LTV) of 50% Majority is freehold properties; condominiums represent approximately 12% of the portfolio Good diversification across Canada with approximately half of the portfolio anchored in Ontario Loans to Canadian condominium developers were $845 MM at Q3/16 ($839 MM at Q2/16) High quality portfolio of well known developers with longstanding relationships with Scotiabank Canadian Mortgage Portfolio: $191B (spot balances as at Q3/16, $B) $93.1 $9.8 Condominium $22B $169B Freehold Insured 59% 41% Uninsured (avg. LTV = 50%¹) $83.3 $31.6 $30.2 $6.3 -$3.6 $25.3 $26.6 $15.3 $13.7 $11.9 $1.6 -$0.2 $11.7 $8.9 $8.3 -$0.6 Ontario B.C. & Territories Alberta Quebec Atlantic Provinces Manitoba & (1) (2) LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data. Some figures on bar chart may not add due to rounding. 39 Saskatchewan Scotiabank®#40Housing Market Structural Differences vs. U.S. Regulation and taxation Canada Mortgage interest not tax deductible Full recourse against borrowers in most provinces (in Alberta and Saskatchewan, recourse is only to the value of property) • Ability to foreclose on non-performing mortgages with no stay periods Mandatory default insurance for any mortgage with Loan-to-value >80% CMHC insurance backed by the government of Canada (AAA). Private insurers are 90% government backed Insurance available for homes up to $1 million Premium is payable upfront by the customer Covers full amount for life of mortgage • Customers with LTV > 80% must qualify at a 5-year fixed rate for variable or less than 5-year term mortgages • Re-financing cap of 80% on non-insured mortgages • Maximum 25-year amortization on mortgages with LTV > 80% Maximum 30-year amortization on conventional (LTV < 80%) mortgages Down payment of > 20% required for non-owner occupied properties U.S. Tax deductible mortgage interest creates incentive to borrow and delay repayment Lenders have limited recourse in most states 90 day to 1 year stay period to foreclose on non-performing mortgages • No regulatory LTV limit • Private insurers are not government backed Product . Conservative product offerings, fixed or variable rate options Underwriting • Terms usually 3 or 5 years, renewable at maturity Extensive documentation and strong standards 40 40 Can include exotic products (adjustable rate mortgages, interest only) 30-year term most common Wide range of documentation and underwriting requirements Scotiabank®#41Appendix 3: Tangerine Overview 41 Scotiabank®#42Tangerine Overview . Tangerine is transitioning from Mono-Line to Multi-Product offering to better meet the everyday banking needs of Canadians. The Everyday Bank Strategy offers Tangerine superior growth opportunities compared to the Bank's previous Savings-only business model, including: Diversified NIAT profile in the face of intensified competition and low interest rates; Attractive Client Profile Tangerine Forward Banking Big 5 42% 38% Avg. client age (25-44) 35% 24% Have a university degree An evolved client experience that positions Tangerine as a financial catalyst instead of a utility; Household income> $100k 13% 30% Personal income > $100k 5% 13% Investable assets > $500k 5% 11% • Higher client growth from new products/cross-sell; and Stickier client base due to primary relationship status. Over the past two years, significant progress has been made to solidify Tangerine as Canada's leading direct bank. In 2016, Tangerine will focus on enhancing its position by: - Delivering a unique, transformational client experience; Acquiring new clients and deepening existing client relationships; Solidifying Tangerine's Brand and Purpose in the marketplace; Leveraging additional opportunities for collaboration between Tangerine and Scotiabank. Client satisfaction continues to be the Bank's principal focus • Tangerine - Low Cost, Scalable Digital Bank Client Sources Tangerine Clients Indexed to other Financial Institutions 59% 21% 7% 3% BIG FIVE CREDIT UNIONS (EX BNS) BNS OTHER 42 Scotiabank®#43Appendix 4: Latin America Overview 43 43 Scotiabank®#44Latin America - Overview Investment Approach • • Scotiabank has a deep history in the Latin American region Our investment approach has remained consistent, in that we start small, understand the market opportunities and build incrementally as the right opportunities present themselves We have invested approximately $6.4 billion over the last 2 decades We continue to focus on transactions in our existing markets to build greater scale and long- term sustainable profitability We are not looking to enter new markets or "plant new flags" The Pacific Alliance • Management has identified the Pacific Alliance as a key area of growth for the Bank The Pacific Alliance reflects a trade bloc with a free trade agreement to liberalize commerce and improve integration among Mexico, Peru, Chile and Colombia (and it is expanding) The strategic purpose of the Pacific Alliance is to strengthen trade flows with Asia and to compete with Brazil and Argentina The Pacific Alliance combined, accounts for 40% of Latin America's GDP, comparable to Brazil The Pacific Alliance is a key area of growth for the Bank => through both acquisitions and organically 44 Scotiabank®#45Latin America - Why The Pacific Alliance? Presents an Attractive Long-Term Opportunity • • • • • Reflects the 6th largest economy in the world and 7th largest exporter Trade bloc with respective governments supporting growth/significant infrastructure spending Strong and favourable relative GDP growth rates (avg. of 2.5-3.5% versus 2-3% in North America) Considerable room to increase banking penetration (avg. domestic credit/GDP of 64%) Fast-growing middle-class with increasing financial needs (eg. 7/10 Peruvians are middle class) Favourable demographics for banking needs (median age of 29 years old) Relatively stable legal, tax and regulatory infrastructure in place Central bankers have earned credibility and banking system is well-capitalized Recent acquisitions in the Pacific Alliance • • . • • 51% of Cencosud's credit card and consumer loan unit in Chile Citibank's retail and commercial banking operations in Peru 50% of BBVA's AFP Horizonte, a pension fund management business in Peru 51% of Colfondos AFP, a pension fund management business in Colombia Citibank's Credito Familiar, a consumer finance unit in Mexico The Bank believes in the Pacific Alliance's long-term growth prospects 45 Scotiabank®#46Pacific Alliance Details Mexico Peru Chile Colombia Total / Average 5 Annual GDP Growth 1 2015F 2016F 2015F 2.5% 2.4% 3.2% 2016F 2015F 2016F 2015F 2016F 3.8% 2.1% 1.7% 3.1% 2.3% 2015F 2.7% 2016F 2.6% Banking Penetration 2 (Loans/GDP) 50% 32% 74% 46% 51% Domestic Credit / GDP 3 54% 28% 124% 53% 65% Current Account / GDP 4 -3.5% -3.7% -2.7% -5.9% -4.0% Market Share and Rank 4 (Total Loans) 5.6% #7 16.6% #3 6.2% #7 5.2% #7 8.4% #6 Country Credit Rating 4 BBB+ BBB+ AA- BBB- BBB+ (S&P) Population 4 128.6M 32.4M 18.2M 48.8M 228M Median Age 27 27 33 29 29 (1) As of August 3, 2016 as per Scotiabank (2) As of Q4/14 as per Scotiabank (3) As of 2015 (4) As of Q2/16 as per Scotiabank (5) Reflects un-weighted average 46 46 Scotiabank®#47Notes 47 Scotiabank®#48Notes 48 48 Scotiabank®#49Investor Relations Contact Information Jake Lawrence 416-866-5712 Senior Vice President [email protected] Steven Hung Director 416-933-8774 [email protected] For further information, please contact: www.scotiabank.com/investorrelations 49 Scotiabank®