Scotiabank Track Record

• 320 300 to Canada, 000s 280 260 Unemployment rate remains low and stable Strong underwriting discipline and 240 220 conservative lending policies are reflected in 200 low delinquency rates Mortgage rules progressively tightened since 2008 180 160 Affordability strains observed in select 140 Canadian Housing Fundamentals Remain Sound Steady population and household income gains, low interest rates, and increased immigration are underpinning demand High household debt supported by stable debt-service costs, low unemployment, and significant home equity International Immigration чий Residential Unit Sales to New Listings Ratio 1.0 number of immigrants ratio 2016/2017 0.9 Target = 300K 0.8 Sellers' Market 0.7 0.6 Balanced 0.5 Market 0.4 0.3 Buyers' Market 0.2 0.1 0.0 markets, primarily in B.C.'s Lower Mainland and Southern Ontario 90 95 00 05 10 15 Sources: Scotiabank Economics, Statistics Canada. 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Sources: Scotiabank Economics, CREA MLS. Data through Jan. 2017. Mortgage Debt Service Ratio High Percentage of Equity Residential Mortgages Arrears 8 % of disposable income 80 real estate equity as % of real estate assets 6 % of mortgages in arrears Canada Interest + Required 75 3 months or more 7 5 Principal Payments 70 1990-2015 00 6 65 4 4 average 60 5 U.S. 3 55 4 50 2 Interest Only 45 3 1 40 2 35 U.S. Canada 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Sources: Scotiabank Economics, Statistics Canada. Data through 2016Q3. 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Sources: Scotiabank Economics, Statistics Canada, U.S. Federal Reserve. Data through 2016Q3. 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Sources: Scotiabank Economics, CBA, MBA. Data through Q4 and October 2016. 34

View entire presentation