Investor Presentation October 31, 2 1 Overview of 2 Results Peter Godsoe Chairman & C.E.O. 2
2 Performance Highlights 2 Record results Net income: $1,926 million, +24% year over year ROE 17.6% vs. 15.3% Top-line revenue growth: +13% Improved productivity: 56.5% vs. 59.3% Specific credit losses of $765 million vs. $485 million Higher capital and reserves Q4/ EPS 95 cents vs. 76 cents Q4/99 ROE 17.% vs. 15.3% Q4/99 3 11 Years of Earnings Growth $ millions $ 2 EPS = $3.67 3 15 1 5 Net Income 2 1 89 91 93 95 97 99 94 & 97 exclude unusual items 4
Ahead of Performance Targets 2 Target ROE 17.6% vs. 16-18% EPS Growth 25% vs. 12-15% Productivity 56.5% vs. <6% Tier 1 8.6% vs. 7.5%+ 5 Performance Review Sabi Marwah Executive Vice-President & Chief Financial Officer 6
Strong Top-Line Revenue Growth $ millions Q4/ Q4/99 change 2 1999 change 1,444 1,226 18% Net interest income (TEB) 5,393 4,835 12% 865 84 3% Other income 3,665 3,183 15% 2,39 2,66 12% Total revenues 9,58 8,18 13% 7 Higher Margins Increase Q4/ vs. Q4/99 vs. Q3/ Net interest margin 2.32% 17 bps (5) bps Increase due to: Improved spreads in Canada +4 - Securities income - (5) International +3 - Wider spreads in U.S. +3 - Other +7-8
Broad-Based Growth in Other Income* Increase (Decrease) vs. Q4/99 Increase (Decrease) vs. 1999 $MM % $MM % 26 41% Retail Brokerage Fees 116 42% 5 17 Mutual Funds 16 14 1 6 Credit Fees 89 16 16 9 Investment Banking 5 7 24 8 Other 114 9 81 11% 385 14% (56) Gain on Investment Securities 15 * excludes gain on sale of stock transfer business and investment in Solidbank (Q3) 9 Relentless Focus on Expense Control 2 vs. 1999 Increase in expenses 8% less: - performance-related - Chile Base expenses 5 2 1% 1
Continued Productivity Leadership expenses as % of revenues 6 56.5% 55 97* 98 99 2 * 1997 excludes unusual items 11 Strong Capital Ratios % of risk-adjusted assets 14 12 1 1.6 11.9 12.2 Total 8 6 7.2 8.1 8.6 Tier 1 4 2 6. 6.9 7.3 Common 1998 1999 2 12
Higher Reserves Substantial Unrealized Gains $ billions 2.2 2 1.5 1.6 Marketable Securities Surplus 1.5.7 Oct-98 Oct-99 Oct- General Provision 13 Business Line Earnings Summary $ millions Q4/ Q4/99 change 2 1999 change 256 167 53% Domestic 882 649 36% 89 83 7% International 364 296 23% 114 158 (28)% Scotia Capital 65 745 (13)% 38 (6) Other 3 (139)* 497 42 24% Total 1,926 1,551 24% * Primarily due to addition to general provision ($15 million pre-tax) 14
Domestic* - Strong Earnings Growth Net income, $ millions 1 36% Continued business growth retail assets: +6% business deposits: +11% double-digit fee income growth 5 Excellent credit quality 1999 2 * includes Wealth Management Several major initiatives Sales Builder new products 15 Record Wealth Management Revenues 1 75 Revenues, $ millions 29% Excellent revenue growth Brokerage: +43% Investment Management: +16% 5 25 1999 2 Major new initiatives i:partner Scotia Partners Portfolio Alliance with Capital Group 16
Rising International Earnings Net income, $ millions 4 23% Caribbean good revenue growth very high ROE 2 Latin America & Asia earnings up 76%* 1999 2 * excludes Solidbank 17 International Developments Mexico Inverlat closed November 3 Chile BSA ownership increased to 98% from 61% Branch rationalizations: Greece, Sri Lanka, Bangladesh 18
Scotia Capital Net income, $ millions 1 Strong revenue growth: credit fees: +21% record trading income: +2% 5 Higher credit losses Successful integration Several innovative deals 1999 2 19 Risk Review John Crean Senior Executive Vice-President Global Risk Management 2
Risk Management Overview Domestic International Scotia Capital Market Risk Both retail & commercial in excellent shape Caribbean in good condition Asia: improving Latin America: acquisitions now stabilized Corporate portfolio well diversified Some softening in credit conditions Widening spreads in the market Very low trading risk 21 Well Diversified by Market % of total loans & acceptances U.S.A. Europe Caribbean Latin America Asia Business Personal Residential Mortgages Canada 22
Well Diversified by Business Segment % of total loans & acceptances Industrial Products Wholesale & Retail Media & Comm. Automotive Real Estate Mining & Forestry Agriculture & Food Oil & Gas Other Transportation Financial Services Utilities Hotels Construction 23 Gross Impaired Loans $ millions Q4/ vs. Q3/ 2 vs. 1999 (25) Domestic - Retail (62) (18) - Commercial (53) (43) (115) 6 International 187* (67) Scotia Capital 195 128 91 Total Change * excludes BSA, Chile acquisition ($97MM) 24 - Canada - U.S.A./Europe (16) 28 192 264
Negative Net Impaired Loans $ billions % of loans & acceptances 2 2 1.5 1.4% 1.5 1.5.67%.44%.26% 1.5 -.5 (.1)% (.3)% 1995 1996 1997 1998 1999 2 -.5 25 U.S.A. Sector Review Telecoms Negligible impaired loans (<$5MM) Health Care Problems loans classified early Theatre operators Modest exposure (US$ 25MM) Primarily senior debt Dot.com sector Negligible exposure 26
Telecom & Cable Exposure $ millions, October 31, 2 Sector Investment Grade Non-Investment Grade Total Cable Operators 764 784 1,548 Regulated Telephone 718 718 Unregulated telephone/wireless 92 1,13 2,23 Other communications - 199 199 Total 2,42 2,86 4,488 Telecom & cable high yield trading portfolio Net Impaired Loans 28 < 5 27 Low Trading Risk # days net trading revenue, fiscal year 2 5 4 1-day VaR: $23 million Low variability in trading revenues 3 2 5 th percentile 95 th percentile 1-12 -1-8 -6-4 -2 2 4 6 8 1 Daily Trading Profit & Loss ($ millions) 28
Focus on 21 Peter Godsoe Chairman & C.E.O. 29 21: Build on Strengths Achieve targets: earnings growth 12-15% ROE 16-18% Higher contribution from all businesses Maintain productivity leadership (target <6%) Continued strong capital & reserves 3
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. 31