Presentation to
the Scotiabank Annual General Meeting
Halifax, Nova Scotia

An address by Richard E. Waugh
President and Chief Executive Officer
Scotiabank

March 6, 2007

"Scotiabank customers report very high levels of customer loyalty.  This higher level of commitment means that our customers are more likely to recommend our services to others.  And it means they'll trust us with more of their business. And these loyalty results are just as strong in many of our international markets, such as the Caribbean and Central America. 

We earn that kind of loyalty not only because of the products we offer, but because of the kind of service we offer. Over the last five years, we have consistently been a leader in customer satisfaction.  This year, we led Canada's major banks in six of 11 customer satisfaction categories, including staff service at the branch.

"With this kind of performance in meeting customer needs, we see great opportunities in acquiring more customers. In other words, if we get them in the door, they like to stay."

Check Against Delivery

Thank you, Luc, for reviewing our financial results.  Certainly, strong results and consistent earnings growth are what Scotiabank shareholders have come to expect.  And Art likes to remind me of that every day! A proud achievement, not only as one of the oldest banks in Canada, but one of the oldest banks in the world.

Our Bank is 175 years old this month.  Although the way we work and do business has changed dramatically over the course of our history, what has remained constant, and sustained our success, are our core values: integrity, respect, commitment, insight and spirit.  And of course our core strengths: customer satisfaction, cost control, risk management, diversification and especially our great team of people, our most important key strength. 

So at Scotiabank, yes we think about our shareholders.  But we also think about our customers, our employees and the communities where we live and work. 

We understand that, to succeed, we must act in a manner that is environmentally, economically and socially responsible. 

We do all of this because it makes sense. It makes business sense.  And we do it because it fits with our values as an organization.

That's why, when we look at our performance as an organization, we look at more than just our financials.  We use a balanced scorecard.   That means financial performance. Without achieving our financial goals, we obviously cannot succeed, no matter what other goals we set for ourselves on any scorecard.  It also means meeting our customer goals, it means operational success and, of course, it means our people.  So this morning, I want to share with you our performance on those measures.

Now, Luc has already covered much of our financial performance: our earnings per share (EPS) growth, return on equity (ROE) and much more.  So let me leave that for a moment.  But I do want to come back to financial performance at the end of my remarks, as well as addressing the future.

Let's begin where it all starts, with customers.  

Our objective is to achieve the highest levels of customer satisfaction and loyalty.  We want to deepen our relationships with our existing customers. And we want to continue to acquire new customers.

For us, it begins with having one clear focus.  That focus applies here in Canada and everywhere else around the world. We want to be the best at helping our customers become financially better off, by providing relevant solutions to their unique needs.

In our research, we found that kind of purpose really resonates with our customers.  In fact, it's a proposition that translates into a tremendous level of customer loyalty. 

You can see here, compared to the other Canadian banks, Scotiabank customers report very high levels of customer loyalty.  This higher level of commitment means that our customers are more likely to recommend our services to others.  And it means they'll trust us with more of their business. And these loyalty results are just as strong in many of our international markets, such as the Caribbean and Central America. 

We earn that kind of loyalty not only because of the products we offer, but because of the kind of service we offer. Over the last five years, we have consistently been a leader in customer satisfaction.  This year, we led Canada's major banks in six of 11 customer satisfaction categories, including staff service at the branch.

With this kind of performance in meeting customer needs, we see great opportunities in acquiring more customers. In other words, if we get them in the door, they like to stay.  In 2006, we added 2 million new customers.  We now serve 12 million customers worldwide.  And as dramatic evidence of how our Bank is evolving as Canada's most international bank, almost five million of those customers are from outside the country.  Here you can see our total customer growth outside Canada during the past two years. This is growth in Mexico and Peru.  It's in the Caribbean and Central America. 

And our focus on customers extends across all client segments. Consider Scotia Capital, our investment and corporate banking division, which was named Best Investment Bank and Best Foreign Exchange Bank in Canada by Global Finance magazine and our derivatives team was ranked No. 1 in Canada by an independent third-party market survey.

Alongside this customer focus, we have clear operational objectives, another part of our balanced scorecard. 

We want to manage our Bank efficiently and have set a productivity ratio of better than 58 per cent.   Luc touched on this earlier - we have industry-leading productivity.  Efficiency doesn't just happen.  It takes a consistent commitment to managing our Bank with an unrelenting focus on making good choices - day in and day out - in how we run our business. 

An additional operational objective is to have a sound and safe bank. Banking is a risk business.  From credit losses, to fraud, and now electronically through the automated banking machine (ABM) network and Internet, we work hard to protect our customers and shareholders and to find the right balance of risks and rewards.  That's why we are diversified across businesses and products with three strong growth platforms: Domestic Banking, International Banking and Scotia Capital.  And we are diversified geographically, operating in some 50 countries. It's a very conscious decision to manage and spread our risks and income streams as broadly as possible. That's why we spend a lot of time managing our credit risks, our market risks and our operating risks.  

Managing our operational risks also includes having strong practices in corporate governance and regulatory compliance.  Our Bank is founded on the principles of accountability, openness and integrity.  Our policies are designed to maintain the independence of our Board and to ensure the Board can effectively provide oversight of the Bank. Our rigorous standards have been set to meet international as well as Canadian requirements.

Finally, our operational objectives include sound capital ratios.  Our balance sheet ratios remain among the strongest of our peers.  This strength has provided safety for our customers' deposits, supported high credit ratings for debt issuances and has given investors confidence.  In an uncertain world, we believe strong capital helps ensure the continuity of our growth strategies. 

In Canada, we acquired National Bank of Greece; Maple Trust, a leader in mortgage lending; and Travelers Leasing Corporation, a leading automobile financing company.

In Peru, we acquired and merged Banco Sudamericano and Banco Wiese Sudameris to become one of the largest banks in the country. The result saw our market share leap from two per cent to 17 per cent.

In Costa Rica, we acquired the private financial group Corporacion Interfin and merged it with our existing operations.  We're now the largest private bank in the country, with a 14 per cent market share.

We also purchased Citibank's consumer lending operations in the Dominican Republic, and entered an agreement with General Motors Acceptance Corporation to purchase up to $20 billion in U.S. retail automotive asset-backed securities over five years.

In China, we were granted Qualified Foreign Institutional Investor status, the first Canadian bank to get this recognition.  This past December we opened our fourth office in China, with a branch in Shanghai, the only Canadian bank permitted to do so.

In total, we invested our capital, all to enhance and grow our Bank, yet kept our balance sheet strong. 

But whether it's managing our operations, serving customers better or acquiring new ones, strong performance for our Bank always comes back to one thing, and that's people, perhaps the most important area of our scorecard.

What I've come to know personally, after more than 35 years with Scotiabank, is that our success is founded on our people.  It's about their ideas and motivation, their skills and desire to serve our customers, their values and work ethic and willingness to work together, what we call One Team, One Goal. 

We value each and every employee.  At Scotiabank, one of our goals is to be recognized as a global employer of choice wherever we do business. We want to be known as a great place to work, a place where all employees are encouraged to realize their potential, and supported in developing and using their talents and abilities to benefit our customers.

We want high levels of employee satisfaction and engagement.  In 2006, we achieved that. Our Employee Satisfaction Index increased to 87 per cent, up from 84 per cent.  We were ranked one of the 50 best employers in Canada by The Globe and Mail Report on Business Magazine.  The Great Place to Work Institute rated Scotiabank in Mexico the top bank.  And we were among Training Magazine's Top 100 Training Organizations in the world for the third consecutive year.

We want to enhance the diversity of our workforce.  In 2006, we achieved that. We have just received the prestigious 2007 Catalyst Award for achievements in the Advancement of Women (AoW).  This award was for improving our representation of women in our senior management team from 18.9 per cent in 2002 to an all-time high of 31 per cent in 2006.

We are the first Canadian company in eight years to receive this internationally recognized award, which will be presented to us in New York this month, along with the other recipients, Goldman Sachs, PepsiCo. and PricewaterhouseCoopers.  I'm personally very proud of this award and I want to thank Sylvia Chrominska, Executive Vice-President, Human Resources and Public, Corporate and Government Affairs and her wonderful team that did all the heavy lifting to get us there.

We remain committed to corporate social responsibility and strong community involvement.  Our Bank contributed more than $42 million to worthy community initiatives around the world in 2006, as evidence of our strong commitment. And our employees are well known in their communities for the time and money they generously give to local causes. Last year, they spent more than 300,000 hours volunteering and fundraising, and we are very proud of - and grateful for - their contributions.

I mentioned at the outset wanting to come back to our financial performance at the end.  And there's a good reason.  Because we often get the comment that we should just focus on the bottom line and forget all this other "stuff."   But we've learned a lot from 175 years, we know there are a lot of ways you can make a dollar and we think our way is the right way.

Consider the financial success our Bank has had over the past decade.  Total returns to common shareholders averaging 20 per cent per annum.

That success is extraordinary.  But you don't have to take my word for it.  Mercer Oliver Wyman, the international consulting firm, created a Shareholder Performance Index.  This is a global measure of the relative performance of the 400 largest companies in global financial services.  Scotiabank ranked No. 1 in North America and No. 2 in the world over the past three, five and 10 years.

So our approach to managing our business and our growth will be about maintaining the right balance.

Over the next few years, our business lines and key support functions will be focusing on three key priorities. 

First and foremost, we must continue to grow profitable, sustainable revenues.  Each of our business lines will be pursuing a combination of organic revenue growth initiatives and key acquisitions unique to each of their businesses to achieve this.

Our second priority is capital management.  Our strong capital today plus the additional capital we're generating gives us the flexibility and strength to pursue many different options and possibilities, as I've described.

That's why our third priority - leadership - will be critical to the success of our long-term growth plans.  Many strategies are possible, but none will work if they are not properly executed. And only people - well led and motivated - will accomplish this.

So going forward, we remain committed to growing our three businesses.  We are committed to a strategy of diversification across businesses and geography.  And we are committed through our many support functions to give our business lines the technical and professional resources to achieve some very aggressive goals.

And make no mistake, when we say "Opportunity means the world to us," which is on the cover of this year's annual report, we believe completely that the world offers us incredible chances to grow. And, of course, this is so unique to Scotiabank. There are very few banks that have an international footprint and perspective like ours.  Our 175 years includes almost 120 years of international experience.

As we head into the future we have a clear vision of where we want to go and how we want to get there.

We'll continue to look for growth in Canada. Our international growth depends on a sound, growing Canadian base.  But we will also continue to look for growth in the Americas and in Asia.  And we'll take the competition head on.

This focus is built on a great tradition that began right here in Halifax. It was here that our customers and founders gave us a particular view of the world and our place in it.

This heritage, this culture, this sense of teamwork, values and dedication is passed on and strengthened, generation upon generation.

And the faces of our Bank - each generation - has changed and will continue to adapt to our ever changing world.

We will always maintain the strong snese of values and dedication that have made us what we are for more than 175 years.

And we will continue to focus on our balanced approach, our goals and strategies measured by our balanced scorecard, and on the people that will execute them, that will ensure our continued success.

Ladies and gentlemen, thank you.