Scotiabank Q2 Financial Results

Scotiabank $ millions Expenses well controlled 1,562 1,565 1,490 883 934 928 Q2/05 Q1/06 Q2/06 ☐ Other expenses Premises & technology Salaries & employee benefits Expenses up 5% or $75 mm yr/yr ■ Salaries up mainly due to acquisitions: $25 mm Higher benefit costs: $19 mm Higher premises, technology and communication costs: $17 mm ■Lower business and capital taxes: ($19) mm ■ Other expenses up, partly due to acquisitions: $33 mm Expenses flat qtr/qtr Higher performance-based compensation in Scotiabank Mexico reflecting finalization of year-end payouts in Q1/06: $21 mm Higher payroll taxes, full quarter impact of El and CPP: $11 mm ■ Lower stock-based compensation: ($35) mm 13 Scotiabank % of risk-weighted assets Strong capital ratios 11.4 10.8 10.2 9.5 9.0 8.6 Q2/05 Q1/06 Q2/06 Tier 1 ■Tangible Common Equity Tier 1 decline of 60 bps vs. Q1 due to: ■ Risk weighted assets (RWA) growth: (63) bps - $11 billion increase in RWA split evenly between organic growth & acquisitions Increased goodwill: (8) bps ■ Retained earnings growth: 11 bps ☐ Higher minority interest: 4 bps (mainly Peru) 14

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