Fiscal 2005 Highlights (year-over-year) - Earnings per share
(diluted) of $3.15, up 11.7% from $2.82 - Net income of $3,209
million, up 10% from $2,908 million - ROE of 20.9%, versus 19.9% -
Productivity ratio of 56.3%, an improvement over 56.9% last year -
Annual dividends per share increase of 22 cents or 20% to $1.32
TORONTO, Nov. 29 /PRNewswire-FirstCall/ -- Scotiabank achieved
record earnings in 2005, with net income of $3,209 million.
Earnings per share (EPS) (diluted) were $3.15, in comparison to
$2.82 in 2004, and return on equity was strong at 20.9%, compared
to 19.9% last year. Scotiabank also delivered solid results for the
fourth quarter ended October 31, 2005, with net income of $811
million, up 15% from the same period last year. Diluted EPS rose to
$0.80, from $0.69 a year ago. ROE was 20.5%. "We had another year
of record results and exceeded all of our 2005 targets," said Rick
Waugh, President and CEO. "Our strategy of diversifying across
three business lines - Domestic Banking, Scotia Capital and
International Banking - combined with improvements in credit
quality underpinned our strong results this year. "One of the major
contributors to our success this year was significant loan growth.
Total loans were 11% higher than in 2004, the highest level in five
years. Domestic Banking has shown significant asset growth in
mortgages and retail lending and there was continuing strong asset
growth in International Banking, notably in Mexico and the
Caribbean, along with contributions from acquisitions in 2005.
"Domestic Banking achieved market share gains and wealth management
had a record year. International Banking also increased market
share in several countries resulting in another successful year for
this division. Our international operations continue to set
Scotiabank apart from our domestic peers. Scotia Capital had a
solid year, setting a record for trading revenues and benefiting
from a healthy credit environment. "This broad-based growth allowed
us to earn through the impact of narrower domestic interest
margins, the stronger Canadian dollar and lower credit fees
reflecting the high levels of liquidity in U.S. and European loan
markets. "We have maintained our strong capital ratios, which are
among the best of the Canadian banks. This has allowed us to
provide shareholders with two dividend increases this year, a
year-over-year increase of 20%. It also provides us with the
flexibility to pursue new growth opportunities, which we continue
to seek in a disciplined manner. "These strong results reflect
Scotiabank's core strengths in risk management and cost control and
our focus on customer satisfaction. They are also a reflection of
customer-focused execution by our talented and dedicated employees,
who give Scotiabank high scores in employee satisfaction surveys.
We are proud to be recognized as an employer of choice." The Bank
exceeded all of its performance targets this year as follows: 1.
TARGET: Generate growth in EPS (diluted) of 5 to 10% per year. Our
year-over-year EPS growth was 11.7%. 2. TARGET: Earn a return on
equity (ROE) of 17 to 20%. For the full year, Scotiabank earned an
ROE of 20.9%. 3. TARGET: Maintain strong capital ratios. At 11.1%,
Scotiabank's Tier 1 capital ratio remains among the highest of the
Canadian banks and strong by international standards. 4. TARGET:
Maintain a productivity ratio of less than 58%. Scotiabank's
performance was 56.3%. "Looking ahead to 2006, we fully expect to
grow earnings per share due to continued asset growth across all
business lines, stabilization of the domestic interest margin and
increases in most retail revenue categories. The extent of this
growth will be impacted by the volatility of the Canadian dollar,"
Mr. Waugh said. "We will be looking to enhance shareholder value by
driving substantial revenue growth - organically and through
acquisitions - in both domestic and international markets across
our three growth platforms. "By applying our philosophy of One
Team, One Goal, we are well-positioned to achieve our vision of
being the best Canadian-based international financial services
company." Financial Highlights As at and for the three months ended
For the year ended
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October July October October October 31 31 31 31 31 (Unaudited)
2005 2005 2004 2005 2004
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Operating results ($ millions) Net interest income(1) (TEB(2))
1,581 1,561 1,461 6,197 5,975 Total revenue(1) (TEB(2)) 2,735 2,689
2,457 10,726 10,295 Provision for credit losses 36 85 40 230 390
Non-interest expenses 1,579 1,517 1,461 6,043 5,862 Provision for
income taxes(1) (TEB(2)) 289 286 238 1,173 1,060 Net income(1) 811
784 705 3,209 2,908 Net income available to common shareholders 803
775 701 3,184 2,892
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Operating performance Basic earnings per share ($) 0.81 0.78 0.70
3.19 2.87 Diluted earnings per share ($) 0.80 0.77 0.69 3.15 2.82
Return on equity (%) 20.5 19.9 18.8 20.9 19.9 Productivity ratio(1)
(%) (TEB(2)) 57.8 56.4 59.4 56.3 56.9 Net interest margin on total
average assets(1) (%) (TEB(2)) 1.97 1.97 2.06 2.00 2.10
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Balance sheet information ($ millions) Cash resources and
securities 93,964 95,911 75,928 Loans and acceptances 198,581
199,530 178,854 Total assets 314,025 317,533 279,212 Deposits
217,445 220,009 195,196 Preferred shares(1) 600 600 300 Common
shareholders' equity 15,482 15,603 14,685 Assets under
administration 171,392 166,717 156,800 Assets under management
26,630 23,975 21,225
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Capital measures Tier 1 capital ratio(%) 11.1 11.1 11.5 Total
capital ratio(%) 13.2 13.1 13.9 Tangible common equity to
risk-weighted assets(3) (%) 9.3 9.3 9.7 Risk-weighted assets ($
millions) 162,799 163,798 150,549
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Credit quality Net impaired loans(4) ($ millions) 681 573 879
General allowance for credit losses ($ millions) 1,330 1,375 1,375
Net impaired loans as a % of loans and acceptances(4) 0.34 0.29
0.49 Specific provision for credit losses as a % of average loans
and acceptances (annualized) 0.16 0.17 0.20 0.14 0.27
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Common share information Share price($) High 44.22 42.64 40.00
44.22 40.00 Low 40.31 39.19 35.28 36.41 31.08 Close 42.99 41.75
39.60 Shares outstanding (millions) Average (Basic) 995 995 1,008
998 1,010 Average (Diluted) 1,008 1,009 1,024 1,012 1,026 End of
period 990 995 1,009 Dividends per share ($) 0.34 0.34 0.30 1.32
1.10 Dividend yield (%) 3.2 3.3 3.2 3.3 3.1 Dividend payout
ratio(5) (%) 42.1 43.7 43.1 41.4 38.4 Market capitalization ($
millions) 42,568 41,547 39,937 Book value per common share ($)
15.64 15.68 14.56 Market value to book value multiple 2.7 2.7 2.7
Price to earnings multiple (trailing 4 quarters) 13.5 13.6 13.8
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Other information Employees 46,631 46,269 43,928 Branches and
offices 1,959 1,944 1,871
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Certain comparative amounts have been reclassified to conform with
current period presentation. (1) Comparative amounts have been
retroactively restated for new CICA accounting requirements
relating to the distinction between equity and liability
instruments. (2) The adjustment that changes GAAP measures to
taxable equivalent basis (TEB) measures is discussed in footnote
(2) of the Total Business Line Review section set out below. (3)
Represents common shareholders' equity and non-controlling interest
in subsidiaries, less goodwill and other intangible assets, as a
percentage of risk-weighted assets. (4) Net impaired loans are
impaired loans less the specific allowance for credit losses. (5)
Represents common dividends for the period as a percentage of the
net income available to common shareholders for the period. Review
of Operating Performance Full-Year Review Net income Scotiabank
achieved record results in 2005, with net income available to
common shareholders of $3,184 million, $292 million or 10% higher
than last year. The increase was driven by improved credit quality
and retail asset growth, partly offset by lower interest margins in
Canada and the negative impact of foreign currency translation.
Total revenue Total revenues (on a taxable equivalent basis) were
$10,726 million in 2005, an increase of $431 million or 4% from the
prior year. Before the impact of foreign currency translation, the
Bank's revenues grew by $718 million or 7%. Growth was broad-based,
with higher results from Domestic Banking, record trading revenues
in Scotia Capital, strong results in International Banking, and
contributions from acquisitions made in 2005. This was partially
offset by lower corporate banking revenues and the negative effect
of foreign currency translation, as the Canadian dollar continued
to appreciate against most currencies in the countries in which the
Bank operates. Net interest income Net interest income on a taxable
equivalent basis was $6,197 million in 2005, up $222 million or 4%
over last year, despite the negative impact of $164 million due to
foreign currency translation. Underlying net interest income rose
by $386 million or 6%. The Bank's interest margin (net interest
income as a percentage of average assets) was 2.00% in 2005, a
decrease of 10 basis points from the previous year. This was due
primarily to a decline in the Canadian currency interest margin.
Canadian currency net interest income was $3,654 million in 2005,
an increase of $134 million or 4% from the prior year. This was
largely driven by another strong year of deposit and retail lending
growth, both in residential mortgages and personal loans, resulting
in a substantial rise of 14% in average retail asset balances.
These increases were partly offset by a compression in the interest
margin, caused by several factors. These included customer
preference for lower-yielding variable-rate mortgages and a
flattening of the yield curve. As well, retail asset growth
exceeded retail deposit growth, with the difference being funded by
more expensive wholesale deposits. Foreign currency net interest
income was $2,543 million this year, $88 million above 2004,
despite a $164 million negative impact due to foreign currency
translation. Underlying net interest income rose by $252 million or
10%. This increase was largely from strong asset growth in
International Banking, particularly Scotiabank Inverlat in Mexico,
as well as the Caribbean and Central America. The acquisition of
Banco de Comercio in El Salvador also contributed to this growth.
These improvements were partly offset by the impact of lower
corporate lending volumes and margins, primarily in the U.S. and
Europe. Other income Other income was $4,529 million in 2005, an
increase of $209 million or 5% from 2004, despite a reduction of
$123 million from foreign currency translation. Underlying
year-over-year growth was a solid $332 million or 8%. There were
increases in card revenues, deposit and payment services, mutual
fund fees, investment management, brokerage and trust services.
Trading revenues were a record, due mainly to growth from
derivatives, fixed income and institutional equity trading.
Investment banking revenues also increased, reflecting the
acquisition of Waterous & Co. by Scotia Capital, strong new
issue revenue and record institutional brokerage fees. These gains
were partially offset by lower realized gains on investment
securities and a decline in credit fees. Non-interest expenses
Non-interest expenses were $6,043 million in 2005, an increase of
$181 million or 3% from last year, which was moderated by the
positive effect of foreign currency translation of $95 million.
Salaries and employee benefits were $3,488 million, up 1% during
the year, tempered by the effect of foreign currency translation.
Underlying salary and benefit expenses, before the impact of
foreign currency translation and the acquisitions during the year,
rose 2%. There was higher performance- based compensation,
reflecting the strong growth in retail brokerage revenues in
ScotiaMcLeod, and higher trading revenues in Scotia Capital. This
was partly offset by a decline in stock-based compensation, due to
a smaller rise in the Bank's share price in 2005, and increased
hedging activities. Pensions and other employee benefits declined
slightly, as higher medical, dental and insurance costs were more
than offset by lower payroll taxes and adjustments to
pension-related costs. Premises and technology expenses were $1,148
million in 2005, an increase of 1% from last year. This was mainly
as a result of a variety of technology projects, including system
enhancements and branch upgrades, partly offset by lower
depreciation expense. There were also higher litigation and
advertising costs. The Bank's productivity ratio - a measure of
efficiency in the banking industry - was 56.3%. This was a slight
improvement from last year, despite increased spending on
technology initiatives to facilitate future revenue growth. The
ratio remained better than our target of 58%. Taxes The provision
for income taxes was $847 million in 2005, an increase of 8% over
last year. This largely reflected the growth in pre-tax income of
10%, partially offset by a higher proportion of income from foreign
subsidiaries with lower tax rates, resulting in an overall
effective tax rate for the year of 20.5%, compared to 20.8% last
year. Scotiabank Inverlat continued to benefit from the utilization
of previously unrecognized tax loss carryforwards. Non-controlling
interest The deduction for non-controlling interest in subsidiaries
was $71 million in 2005, a decline of $4 million from 2004,
reflecting the full- year impact of the Bank increasing its
ownership of Scotiabank Inverlat to 97% during 2004. Risk
Management Credit risk In 2005, the total provision for credit
losses was $230 million, a significant improvement from $390
million in 2004. The specific provision for credit losses was $275
million, down substantially from $490 million last year, mostly in
the commercial and corporate portfolios, reflecting better credit
conditions throughout 2005. Domestic Banking provisions were $274
million, a decrease of $43 million from last year. The improvement
was entirely in the commercial portfolio where the provisions
declined by $61 million to $49 million. This reduction was offset
in part by an increase of $18 million in retail loans, consistent
with the continued growth in that portfolio. Nevertheless, retail
provisions remained low at 0.22% of average assets. While
provisions of $70 million in the International Banking portfolios
were unchanged from last year, higher provisions in Mexico and
Chile were offset by lower provisions in the Caribbean and Asia. In
Scotia Capital, there was a net recovery of $71 million in 2005,
compared to provisions of $106 million in 2004. Of the $177 million
reduction, $147 million was in the U.S. and $33 million in Europe.
These declines were due to fewer new problem loans compared to the
previous year. Overall, strong credit conditions prevailed in 2005.
During 2005, the general allowance for credit losses was reduced by
$45 million to $1,330 million at October 31, 2005, or 0.82% of
risk-weighted assets. The mix of economic and business trends which
factor in the determination of the general allowance were more
favourable this year, consistent with improved credit conditions
and the credit quality of the portfolio. This was tempered somewhat
by the potential impact on the loan portfolio of the significant
appreciation of the Canadian dollar, rising energy prices and
weakness in the forestry and auto sectors. Net impaired loans,
after deducting the specific allowance for credit losses, were $681
million at October 31, 2005, a significant improvement of $198
million from a year ago. The largest decline was in Scotia Capital,
reflecting improved credit conditions and the positive impact of
risk and portfolio management strategies. Market risk Market risk
in the Bank's trading activities remained fairly modest with an
average one day Value at Risk (VaR) of $7.6 million in 2005,
compared to $8.8 million in 2004. In the fourth quarter, VaR
decreased to an average of $7.5 million from $7.7 million in the
third quarter. Both the year-over-year and quarter-over-quarter
declines were the result of reduced interest rate risk. Trading
revenue was positive on 89% of the trading days in the fourth
quarter, compared to 98% in the last quarter. No single day's loss
exceeded the one day VaR. Liquidity risk Liquidity risk is the risk
that the Bank is unable to meet its financial obligations in a
timely manner at reasonable prices. Liquidity risk is controlled by
policies and limits with respect to cash flow gaps over specified
time periods and minimum holdings of core liquid assets that can
generally be sold or pledged to meet the Bank's obligations. As at
October 31, 2005, total liquid assets were $82 billion (2004 - $69
billion), equal to 26% of total assets versus 25% the previous
year. Balance sheet The Bank's total assets were $314 billion as at
October 31, 2005, up $35 billion or 12% from last year. Growth was
spread across most asset categories, and was offset marginally by
the translation impact of the stronger Canadian dollar, which
reduced assets by $3 billion. The Bank had solid growth in its loan
portfolio in 2005, with loans up $19 billion or 11%, with loan
balances at their highest level in five years. Domestic retail
lending operations continued to reflect very good performance.
Residential mortgages grew $5 billion or 8%, and personal and
credit card lending increased significantly, up $4 billion or 15%.
This growth was driven by continued strong sales of ScotiaLine
products and the popularity of the new Flex Value mortgage, as well
as the low levels of interest rates and a robust housing and home
renovation market. International Banking also experienced strong
growth in retail lending assets, particularly in Mexico and the
Caribbean, with growth of $2 billion. Business lending increased $5
billion, in part due to good loan growth in Mexico and the
Caribbean and Central American region. Underlying lending volumes
in the U.S. and European corporate loan portfolios declined in
2005, following more substantial declines in recent years.
Securities purchased under resale agreements contributed a further
$3 billion to growth in loans. Securities increased $15 billion
from last year. Trading securities rose $7 billion, largely in
Scotia Capital, where these securities are used to hedge market
risk relating to trading activities with clients, with smaller
increases in Scotiabank Inverlat's trading portfolio. Investment
securities rose by $8 billion, due primarily to the $5 billion that
was recognized as a result of the consolidation of a multi-seller
commercial paper conduit from the adoption of new accounting
standards for variable interest entities (VIEs). As at October 31,
2005, the surplus of the market value over book value of the Bank's
investment securities was $1,035 million, down only $13 million
from the prior year, notwithstanding net realized gains of $414
million in 2005. The Bank realized a gain of $118 million on the
sale of part of its holdings in Shinsei Bank of Japan in 2005,
compared to a gain of $125 million in 2004. The Bank's total
liabilities increased $34 billion to $298 billion as at October 31,
2005, with underlying growth of $37 billion partly offset by the
foreign currency translation impact of $3 billion. Deposits
increased by $22 billion this year. Business and government
deposits were up $15 billion in 2005, mainly to fund retail asset
and securities growth. Domestic personal deposits grew by $3
billion, largely due to growth in term deposits, as customers took
advantage of higher interest rates. As well, personal deposits rose
$1 billion in the Latin American and Caribbean markets. Obligations
related to repurchase agreements fluctuate as the Bank changes its
mix of wholesale funding. The year-over-year increase of $7 billion
was attributable mainly to the growth in the securities portfolio.
Total shareholders' equity rose by $1,097 million in 2005, as the
Bank had a record level of internally generated capital of $1,867
million and issued $300 million non-cumulative preferred shares.
These increases were partly offset by common share buybacks, and
the net effect of unrealized foreign currency translation losses
recorded in shareholders' equity. Capital management Scotiabank's
capital base remained strong at year end, with a tangible common
equity (TCE, as defined under Financial Highlights above) ratio of
9.3%, down from 9.7% last year. However, the Bank's TCE ratio
continued to be the strongest of the major Canadian banks. The
Bank's Tier 1 ratio was 11.1% at October 31, 2005, down from the
11.5% last year, but unchanged from last quarter. Tier 1 capital
rose by $885 million, driven by a record increase in internally
generated capital of $1,867 million and the issuance of the Series
13 preferred shares of $300 million. Partly offsetting the growth
in Tier 1 capital were the cost of common share buybacks of $1,057
million and the $178 million impact of net unrealized foreign
currency translation losses recorded in shareholders' equity. In
January 2005, the Bank renewed its normal course issuer bid on the
Toronto Stock Exchange to buy back up to 50 million common shares
at prevailing market prices. During fiscal 2005, 26.1 million
common shares were purchased at an average price of $40.51,
compared to the repurchase of 9.1 million shares in 2004 at an
average price of $34.96. The normal course issuer bid is expected
to be renewed upon its expiry on January 5, 2006. Fourth Quarter
Review Net income Net income available to common shareholders was
$803 million in the fourth quarter, an increase of $102 million or
15% from the same quarter last year, despite a negative impact of
$24 million from foreign currency translation. Underlying net
income available to common shareholders rose by $126 million or 18%
from last year. The year-over-year growth was due mainly to higher
net interest income, increased brokerage and investment management
revenues and greater realized securities gains, partly offset by a
compression in the margin and higher expenses. Net income was $27
million above last quarter, notwithstanding a $19 million negative
impact from foreign currency translation. The increase reflected
lower credit losses due to a $45 million (pre-tax) reduction in the
general allowance for credit losses, along with greater brokerage
revenues, partly offset by higher expenses. Total revenue Total
revenue (on a taxable equivalent basis) was $2,735 million in the
fourth quarter, an increase of $278 million or 11% over the same
quarter last year, notwithstanding a negative foreign currency
translation impact of $56 million or 2%. Quarter over quarter,
total revenue rose $46 million or 2%, tempered by a $47 million
negative impact from foreign currency translation. Net interest
income Net interest income (on a taxable equivalent basis) was
$1,581 million in the fourth quarter, an increase of $120 million
or 8% over the same quarter last year, and $20 million above the
third quarter. The Bank's interest margin was 1.97% in the fourth
quarter, a decrease of nine basis points from last year, but
unchanged from last quarter. Canadian currency net interest income
was $946 million in the fourth quarter, an increase of $52 million
or 6% over the same quarter last year, and $32 million or 3% over
the third quarter. Compared to last year, the substantial growth in
average retail balances was partially offset by a decline in the
interest margin. Margin compression resulted from customer
preference for lower yielding variable-rate mortgages, a flattening
of the yield curve and the increased use of higher cost wholesale
deposits to fund retail asset growth. Foreign currency net interest
income was $635 million in the fourth quarter, an increase of $68
million or 12% over the same quarter last year, despite a negative
$36 million impact from foreign currency translation. Underlying
foreign currency net interest income rose by $104 million or 18%,
from higher retail asset volumes in Mexico and the Caribbean,
partly offset by lower U.S. and Europe corporate loan balances and
margins. This quarter's net interest income declined $13 million
from last quarter. However, excluding the impact of foreign
currency translation, underlying net interest income rose 2%. Other
income Other income was $1,154 million in the fourth quarter, an
increase of $158 million or 16% from the same quarter last year.
This growth was driven by higher net gains on the sale of
investment securities and stronger retail brokerage and trading
revenues. The Scotia Waterous and Banco de Comercio acquisitions
also contributed to the growth in other income. Foreign currency
translation reduced other income by $20 million. Quarter over
quarter, other income rose by $26 million, due mainly to strong
retail brokerage revenues, the impact of the Waterous acquisition
and higher insurance revenues. Partially offsetting were the
negative impact of foreign currency translation of $18 million and
declines in credit fees and trading revenues. Credit risk The total
provision for credit losses was $36 million in the fourth quarter,
compared to $40 million last year and $85 million in the previous
quarter. This quarter's provision was comprised of $81 million in
specific provisions and a reduction of $45 million in the general
allowance for credit losses. The specific provision for credit
losses of $81 million in the fourth quarter was down slightly from
the $90 million in the fourth quarter of last year and the $85
million in the previous quarter. The continuing low levels of
provisions reflect a generally good credit environment. Scotia
Capital had a net recovery of $7 million in the fourth quarter
compared to a net recovery of $25 million in the fourth quarter of
last year and a $2 million provision for credit losses in the
previous quarter. In Domestic Banking, overall credit quality
remained strong, with specific provisions of $69 million relatively
unchanged from the same period last year and the prior quarter.
Specific provisions in International Banking of $16 million in the
fourth quarter were down from $21 million in the previous quarter,
and $43 million in the fourth quarter last year when higher
provisions were taken in the Caribbean region due to the effects of
hurricanes. The general allowance for credit losses was reduced by
$45 million in the quarter as the positive trends in credit quality
continued. In the fourth quarter of 2004, the general allowance was
reduced by $50 million. Total net impaired loans, after deducting
only the allowance for specific credit losses, were $681 million as
at October 31, 2005, an increase of $108 million from last quarter
as additional net formations occurred in each business line.
Non-interest expenses and productivity Non-interest expenses were
$1,579 million in the fourth quarter, an increase of $118 million
or 8% over the same quarter last year. Foreign currency translation
had a positive impact on expenses, partly offset by the impact of
the Banco de Comercio and Scotia Waterous acquisitions. Also
contributing to the increase were higher advertising costs, mainly
from a major credit card marketing campaign in Mexico, an
underlying 3% increase in salaries and employee benefits, and
higher litigation costs. Quarter over quarter, non-interest
expenses rose $62 million, due mainly to higher advertising,
technology and professional expenses, employee training and
volume-driven appraisal and acquisition fees. The Bank's
productivity ratio was 57.8% this quarter, compared to 59.4% in the
same quarter last year, and 56.4% last quarter. Taxes The Bank's
effective tax rate was 20.4% in the fourth quarter, a 180 basis
point increase from the same quarter last year but virtually
unchanged from the previous quarter. The year-over-year increase
was due primarily to higher income from tax-exempt securities in
the prior year. This effect was partially offset by higher levels
of earnings from foreign subsidiaries with lower tax rates.
Non-controlling interest The deduction for non-controlling interest
in subsidiaries was $20 million for the quarter, up $7 million from
the same period last year, and $3 million from last quarter, due to
higher levels of earnings in subsidiaries. Dividend The Board of
Directors, at its meeting on November 29, 2005, approved a
quarterly dividend of 36 cents per common share, an increase of 2
cents, payable on January 27, 2006, to shareholders of record as of
January 3, 2006. This will be 12.5% higher than the quarterly
dividend paid in January 2005, and continues the Bank's long record
of dividend increases. Outlook The global economic expansion is
expected to continue through the closing months of 2005. However,
growth should be more moderate in the year ahead due to high energy
prices and gradually rising interest rates, both in Canada and
abroad, during the first half of 2006. The expected increase in
interest rates reflects concerns among central banks in a number of
countries that inflation may increase. In Canada, as the housing
sector and consumer purchases of major household items lose
momentum, growth will increasingly be driven by business
investment, activity in the resource sector and more stimulative
government policies. Rapid economic expansion in China, India and a
number of other emerging economies will continue to provide
important support for a wide range of commodity markets,
underpinning strong growth in Western Canada. Prospects in other
regions will be tempered by the appreciation of the Canadian
dollar, which has added to competitive pressures in other sectors
of the economy. Notwithstanding these challenges, we remain
confident in our ability to continue to achieve strong results. For
2006, we have established the following objectives: - Earnings per
share growth - 5-10% - ROE - 18-22% - Productivity ratio of less
than 58% - Maintain strong capital ratios and credit ratings
Business Line Highlights Domestic Banking Full Year Domestic
Banking reported net income available to common shareholders of
$1,253 million in 2005, $148 million or 13% higher than last year,
with a strong return on equity of 31.0%. Domestic Banking accounted
for 39% of the Bank's total net income. Results included
significant growth in wealth management, along with continued
strong performances in each of retail, small business and
commercial banking. Domestic retail assets grew 10% in 2005. This
was led by a substantial increase in residential mortgage balances
before securitization of $6.6 billion or 9%, partly driven by
customer preference for the new Flex Value Mortgage. There was also
very strong year-over-year growth of 15% in personal revolving
credit, reflecting continued strength in the home renovation
market. Personal deposits grew by 5%, due mainly to an increase in
term deposit balances and the ongoing success of the Money
Master(R) High Interest Savings Account. Business deposits,
including Money Master for business(TM), rose by 11%, continuing
the double-digit growth trend of the past several years. Assets
under administration rose 14% to $111 billion. Net asset inflows
from new customers, as well as continued growth in our share of
customers' investment business, complemented market-driven gains.
Total revenues were $5,395 million, up $230 million or 4% from last
year. Net interest income increased by $82 million to $3,576
million in 2005, because of strong volume growth in assets and
deposits. The interest margin declined year over year, largely
reflecting increased customer preference for lower-yielding
variable-rate mortgages, a flattening of the yield curve and
increased use of more expensive wholesale deposits to fund strong
retail asset growth. Other income for the year was $1,819 million,
an increase of $148 million or 9%, driven primarily by retail
banking and wealth management activities. Brokerage revenues rose
$67 million or 14%, from greater customer trading activity and
higher fee-based assets. In addition, mutual fund revenues were a
record due to higher balances, reflecting in part the success of
the Partners Portfolios and a revised management fee structure.
Retail banking revenues rose from both volume increases and price
changes. Provisions for credit losses were $274 million in 2005,
down $43 million or 14% from last year, due to lower provisions in
the commercial portfolio. Credit quality remained strong in the
retail portfolio, with the ratio of loan losses to average loan
balances improving one basis point from last year to 22 basis
points. Furthermore, the consumer loan portfolio is 89% secured.
Non-interest expenses of $3,296 million remained well-controlled in
2005, up a relatively modest $79 million or 2% from last year. The
increase was due mainly to higher performance-based compensation,
in line with stronger brokerage revenues. This was partly offset by
lower mortgage acquisition and appraisal costs, as well as a
decline in stock-based compensation, due to a smaller increase in
the Bank's share price in 2005. Salary costs were basically
unchanged as normal merit increases were offset by lower average
staffing levels. Fourth Quarter Domestic Banking net income
available to common shareholders for the fourth quarter was $326
million, a substantial increase of $78 million or 31% from the same
quarter last year. Quarter over quarter, net income rose by $7
million. Net interest income increased $68 million or 8% year over
year due to asset growth. Retail assets before securitization rose
10%, primarily from growth of $7 billion or 9% in residential
mortgage balances. Quarter over quarter, net interest income rose
by $24 million. Other income grew by $58 million or 14% from last
year, primarily from increased retail brokerage and mutual fund
fees and higher credit card revenues. Compared to the last quarter,
other income rose 5%, again due to increased brokerage and mutual
fund fees. Loan losses remained stable. In the fourth quarter,
provisions for credit losses were $69 million, down slightly from
$74 million last year, but up $6 million from last quarter.
Non-interest expenses rose modestly, up $25 million or 3% from the
same quarter last year, due mainly to increased performance-based
compensation. Expenses rose 6% quarter over quarter, with increases
in a number of categories, including advertising and employee
training. Other Domestic Banking highlights: - ScotiaMcLeod's
fee-based advisory programs had the highest growth rate among our
major competitors for the third consecutive year, reaching the $10
billion mark this quarter. - Entered into two major sponsorship
agreements this quarter, including: - a two-year sponsorship with
the CFL with the exclusive naming rights to the East and West
semi-finals and finals; - a five-year agreement to co-sponsor the
Scotiabank Giller Prize, Canada's most prestigious literary award.
- Subsequent to year-end, announced the acquisition of the Canadian
operations of National Bank of Greece (NBG), a full-service
chartered bank and wholly-owned subsidiary of National Bank of
Greece S.A. The transaction includes all assets and liabilities of
NBG Bank, whose Canadian operations comprise 10 branches in the
cities of Montreal, Laval, Toronto, Mississauga and Hamilton.
Scotia Capital Full Year Scotia Capital reported net income
available to common shareholders of $915 million in 2005, a 12%
increase year over year, and contributed 29% of the Bank's total
net income. The increase was due mainly to a net loan loss recovery
in 2005 compared to a net provision for credit losses in 2004. In
addition, record earnings were reported in Global Trading, with
particularly strong results in derivatives. These were partly
offset by the negative impact of foreign currency translation of
$34 million and a reduction in corporate lending assets. Return on
equity was 28.4% in 2005, a significant increase from the prior
year. Corporate lending balances decreased 8% overall, and were
down 16% in the U.S. and Europe, approximately half of which was
due to the negative impact of foreign currency translation. The
decline in lending volumes reflects continued high levels of market
liquidity. In Canada, loan growth of 5% was achieved, the first
increase in several years due to more robust client demand,
particularly in the oil and gas sector. Total revenues were
relatively flat at $2,169 million in 2005. Foreign currency
translation reduced total revenues by $65 million. Net interest
income fell $88 million or 9% to $849 million, while other income
increased $93 million or 8% to $1,320 million. Revenue from
Canadian operations rose 8%, because of stronger institutional
equity trading results, higher new issue fees in investment
banking, and the inclusion of four months of results from Scotia
Waterous. These increases were partially offset by lower credit
fees and net interest income, as tighter market pricing offset
volume gains. Corporate banking revenues in the U.S. and Europe
decreased 22%, with lower interest income and credit fees, as a
result of lower corporate loan volumes and tighter market pricing.
Global Trading generated strong results, as revenues increased 18%,
reflecting a record in derivatives due to client-driven activity
and strong growth in fixed income revenues. Foreign exchange and
precious metals had solid results, although dampened somewhat by
the effect of foreign currency translation. Scotia Capital reported
net recoveries of $71 million in 2005, compared to specific
provisions for credit losses of $106 million last year. The
improvement was primarily in the U.S. and Europe, where provisions
declined $147 million and $33 million, respectively. There were net
recoveries in Canada, although down slightly compared to the prior
year. Net impaired loans continued to decline, particularly in the
U.S., reflecting overall strong credit conditions. Non-interest
expenses were $929 million in 2005, a 3% decrease from 2004, due
largely to the positive impact of foreign currency translation of
$21 million and lower salary and benefit costs. These declines were
partially offset by higher severance expenses and an increase in
performance-related compensation, in line with improved results.
Fourth Quarter Net income for the quarter was $229 million, an $8
million decrease from last year. Higher revenues, primarily from
derivatives, were offset by lower loan loss recoveries and lower
tax benefits from certain structured transactions. The $29 million
quarter-over-quarter increase in net income reflected higher
revenues, partly from Scotia Waterous, greater loan loss recoveries
in Canada and the U.S., and lower expenses. Year over year,
revenues rose $52 million or 11% to $539 million. In Canada,
revenues increased slightly as the contribution from Scotia
Waterous more than offset the impact of lower lending revenues. In
the U.S. and Europe, revenues were relatively flat as gains from
the sale of securities in the U.S. offset a decline in corporate
lending revenues caused by lower asset levels. Global Trading
revenues increased a substantial 41% from last year, primarily
reflecting growth in derivatives. Quarter over quarter, revenues
rose 4%, due to realized securities gains in the U.S. There was a
net recovery of $7 million in credit losses in the fourth quarter,
compared to a net recovery of $25 million last year and a provision
for credit losses of $2 million last quarter. Non-interest expenses
were $198 million in the fourth quarter, a small decrease from last
year and $16 million lower than the third quarter.
Performance-based compensation and salaries and benefits declined,
partly offset by an increase in severance-related expenses. Other
Scotia Capital highlights: - Named Best Foreign Exchange Bank in
Canada for the second year in a row by Global Finance magazine. -
Completed the first transaction under the Scotia Capital brand in
Mexico, a US$1.5 billion secondary equity offering for CEMEX, a
leading global building materials company. Scotia Capital was the
co-lead manager for the US$400 million Mexican-listed portion of
the issue and the co-manager for the US$1.1 billion US-listed ADR
issue. - Acted as joint bookrunner on the CanWest MediaWorks Income
Fund initial public offering (IPO) which raised $550 million,
making it the second largest business income trust IPO in Canadian
history. As part of the transaction, Scotia Capital was also the
lead arranger, bookrunner and administrative agent on the
restructuring of the client's bank debt, which included $1.5
billion in new facilities. Scotia Capital also acted as the lead
risk management advisor and sole hedge advisor. International
Banking Full Year International Banking continued to earn through
the negative impact of a stronger Canadian dollar, with net income
available to common shareholders in 2005 of $800 million,
contributing 25% of the Bank's total net income. This was an
increase of $82 million or 12% from last year, despite a negative
impact of $62 million due to foreign currency translation. Return
on equity was a solid 21.6%. While all regions contributed to this
strong growth, the most significant was Scotiabank Inverlat in
Mexico. Inverlat's net contribution increased 28% from last year,
dampened 5% by the impact of foreign currency translation. This
increase was driven by strong loan growth and higher retail banking
fees. Results in the Caribbean also improved, due primarily to
lower loan losses and the acquisition of Banco de Comercio in El
Salvador. Assets increased 2% during the year, or 9% before the
impact of foreign currency translation. Underlying retail loan
growth was a very strong 19%, particularly in mortgages, led by
growth in Mexico, Chile and the Caribbean. Commercial loan growth
was 6%. Underlying growth in low cost demand and savings deposits
was also strong at 11% reflecting continued growth in most
Caribbean countries and in Mexico. Total revenues were $2,762
million in 2005, an increase of $163 million or 6% from last year.
Total revenues were reduced by 6% or $158 million due to the
negative impact of foreign currency translation. Net interest
income was $1,969 million in 2005, an increase of $111 million or
6% from last year, despite a negative foreign currency translation
impact of $117 million or 6%. Strong asset growth in Mexico and the
Caribbean and the Banco de Comercio acquisition drove the increase.
Margins were up slightly, with variations in individual markets.
Other income rose 7% year over year to $793 million, or 13% before
the negative impact of foreign currency translation. The increase
was due mostly to gains on the sale of emerging market securities
and contributions from the newly acquired Banco de Comercio,
partially offset by lower fee income from loan collection services
associated with the Baninter acquisition in the Dominican Republic,
which are now complete. There was also strong growth in retail fees
in Mexico and the Caribbean due to our credit card acquisition
strategy, and higher wholesale revenues in Mexico. The provision
for credit losses was $70 million in 2005, unchanged from last
year. Lower provisions in the Caribbean and Asia were offset by
higher provisions in Mexico and Chile. Non-interest expenses were
$1,712 million in 2005, up 7% or $106 million from last year.
Expenses would have been higher by 11%, but benefited from a
positive 4% impact from foreign currency translation. Expenses rose
due to the Banco de Comercio acquisition, higher salaries in Mexico
and the Caribbean, credit card marketing initiatives and
business-related growth in Mexico, and higher litigation costs.
Fourth Quarter International Banking reported net income available
to common shareholders of $174 million this quarter, an increase of
$15 million or 10% from the same quarter last year, notwithstanding
a negative foreign currency translation impact of $12 million. This
improvement was due primarily to increased net interest income in
the Caribbean and Mexico and reduced loan losses in the Caribbean.
Compared to last quarter, earnings declined $60 million or 25% due
to lower gains on the sale of emerging market securities and higher
marketing expenses. There was strong loan growth of 12%,
particularly in the Caribbean and Mexico, despite the dampening
impact of foreign currency translation. Underlying loan growth,
excluding this impact and the acquisition of Banco de Comercio, was
14% from the same period last year, due to strong growth in
mortgages, with substantial increases in Mexico, Chile and the
Caribbean. Total revenues were $708 million, an increase of 12%
from last year, but down 6% from last quarter, due primarily to the
negative impact of foreign currency translation. Net interest
income was $506 million, an increase of 14% from last year and
essentially unchanged from last quarter. The year-over-year
increase was due to strong asset growth, the Banco de Comercio
acquisition, and higher margins in the Caribbean and Latin America.
Other income was $202 million this quarter, up $13 million from the
same quarter last year, reflecting strong growth in Mexico,
particularly in gains on investment securities. Quarter over
quarter, other income declined 15% due primarily to higher gains on
the sale of emerging market securities realized last quarter.
Credit quality in International remained strong. The provision for
credit losses was $16 million this quarter, down $27 million from
last year and $5 million below last quarter. The decrease from last
year was due partly to higher credit costs in the Caribbean in 2004
as a result of hurricanes. Non-interest expenses were $486 million
this quarter, up 22% from last year and 9% from last quarter. These
increases reflect the acquisition of Banco de Comercio, higher
expenses in Mexico due to marketing initiatives and increases in
performance-based compensation. Other International Banking
highlights: - Successfully launched credit card products in Belize,
Guyana, St. Maarten and Turks & Caicos, where our customers are
now offered MasterCard, Gold MasterCard and the co-branded
Scotiabank AAdvantage MasterCard (available in Belize and Turks
& Caicos). - Achieved several milestones in the growth of
operations in China during the quarter, including: - receiving
approval to offer Chinese renminbi services with local companies; -
offering treasury services (foreign exchange spot in all
currencies) to local and multinational companies; - opening an
expanded branch in Guangzhou with a fully equipped treasury dealing
room to support the expansion of corporate lending, trade finance
and treasury business. - Won several awards this quarter from Latin
Finance magazine, recognizing leadership in the industry,
including: Bank of the Year in Mexico, Bank of the Year in Jamaica
and Bank of the Year in the Caribbean Region. Other Full Year The
Other category represents smaller operating segments, including
Group Treasury and other corporate items, which are not allocated
to a business line. Net income available to common shareholders was
$216 million in 2005 compared to $250 million in 2004. The decrease
was due mainly to a smaller reduction in the general allowance for
credit losses this year. Revenues decreased by $19 million from
2004, mainly from lower investment gains in Group Treasury. Net
interest income was negative $523 million in 2005, an improvement
of $65 million from last year, mainly from higher dividend income.
Net interest income includes the elimination of the gross-up of
tax-exempt income. This amount is included in the operating
segments, which are reported on a taxable equivalent basis and
offset in this segment. This reduction was $326 million in 2005,
compared to $274 million in 2004. Other income declined $84 million
year over year. Investment gains were $60 million lower in Group
Treasury, primarily from lower bond gains, partially offset by
increased gains on equity investments. In addition, in 2005 a gain
of $118 million was realized on the sale of a portion of the Bank's
investment in Shinsei Bank, compared to $125 million gain realized
in 2004. The provision for credit losses included a $45 million
reduction in the general allowance in 2005, compared to a $100
million reduction in 2004. The provision for income taxes includes
the elimination of the gross up of tax-exempt income, which was $52
million higher than last year. Fourth Quarter Net income available
to common shareholders was $74 million, compared to $57 million
last year, and $22 million last quarter. The quarter-over-quarter
increase reflected the $45 million reduction in general allowance
for credit losses this quarter. Revenues increased by $23 million
year over year, and were $27 million higher than last quarter due
mainly to higher net gains on equity investments. Other Initiatives
Corporate governance Sound and effective corporate governance
continues to be a priority for Scotiabank and is considered
essential to the Bank's long-term success. Scotiabank's corporate
governance policies are designed, and are reviewed annually, to
maintain the continued independence of the Board and its ability to
effectively supervise management's operation of the Bank. Board
independence provides that the Bank is managed for the long-term
benefit of its stakeholders. In November 2005, the Board of
Directors adopted a new corporate governance policy that requires
majority voting for the election of Bank directors, in uncontested
elections. Directors receiving more votes withheld than for their
election will be required to tender their resignation. After
considering recommendations from the Corporate Governance and
Pension Committee, the Board will decide - within 90 days of the
annual meeting - whether or not to accept the resignation. It is
expected resignations will be accepted, unless there are
extenuating circumstances. The Board of Directors will announce any
such decisions via press release. This important initiative
recognizes the role shareholders play in selecting Bank directors.
This policy is available on the Bank's website in the Corporate
Governance section. For further information on Scotiabank's
corporate governance policies, please refer to the corporate
governance section of Scotiabank's website,
http://www.scotiabank.com/, which includes information about the
Board, including profiles of the Bank's directors and executives,
and copies of the charter and membership of each Board committee.
Disclosure procedures The Board of Directors and the Audit and
Conduct Review Committee of Scotiabank reviewed and approved this
press release prior to its release today. The disclosure controls
and procedures of Scotiabank support the ability of the President
and Chief Executive Officer and the Executive Vice-President and
Chief Financial Officer to certify the annual Consolidated
Financial Statements and the annual Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Community involvement Contributing to the well-being of communities
is an important part of who we are and what we do. In all of the
many places where we live, work and do business, we strive to play
a leadership role and make a positive impact. - Nearly 10,000
runners from more than 30 countries participated in the Scotiabank
Toronto Waterfront Marathon on September 25. Our focus was the
Scotiabank Charity Challenge, which helped raise funds for more
than 40 charities. Fundraising topped $600,000. - Building on
successful programs in Winnipeg and Vancouver, the Centre for
Diversity Education and Training received support to expand their
Discovering Diversity Schools Program to Calgary and Halifax. The
centre provides opportunities for learning and dialogue to educate
people across Canada about tolerance, respect and understanding,
and the value of diversity. Employees and human resources
Scotiabank recognizes that success relies on the strength of our
employees. To continue to be successful, we are committed to
creating and maintaining an environment that attracts talented and
motivated people and provides them with a challenging and rewarding
employment experience. - More than 41,600 employees responded to
our annual global employee satisfaction survey, known as
"ViewPoint." The overall level of satisfaction reported was a very
strong 83 per cent, continuing the upward trend enjoyed in the last
few years. The results reinforce Scotiabank's commitment to being
an "employer of choice." In 2005, Scotiabank was named one of the
Top 50 Employers in Canada by The Globe and Mail's Report on
Business in its annual employment survey. - Scotiabank developed
its first Global Orientation Program to provide new employees with
a consistent and positive introduction to the organization. The
online program will be rolled out across the entire Scotiabank
Group over the coming months. - In September, we launched a new
university campus recruitment campaign that targets MBA students
and fourth-year undergraduates at Canadian universities. Running
until April 30, 2006, the campaign will explain Scotiabank's
employment offer while gathering valuable information that will
help recruiters attract the best and the brightest to the
organization. Business Line Review Domestic Banking For the three
months ended For the year ended
-------------------------------------------------------------------------
(Unaudited) ($ millions) October July October October October
(Taxable equivalent 31 31 31 31 31 basis)(1) 2005 2005 2004 2005
2004
-------------------------------------------------------------------------
Business line income Net interest income $ 929 $ 905 $ 861 $ 3,576
$ 3,494 Provision for credit losses 69 63 74 274 317 Other income
474 453 416 1,819 1,671 Non-interest expenses 870 825 845 3,296
3,217 Provision for income taxes 136 149 109 566 522
-------------------------------------------------------------------------
Net Income $ 328 $ 321 $ 249 $ 1,259 $ 1,109 Preferred dividends
paid 2 2 1 6 4
-------------------------------------------------------------------------
Net income available to common shareholders(2) $ 326 $ 319 $ 248 $
1,253 $ 1,105
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other measures Return on equity(3) 30.1% 31.2% 26.3% 31.0% 30.6%
Average Assets ($ billions) $ 127 $ 124 $ 117 $ 123 $ 112
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Scotia Capital For the three months ended For the year ended
-------------------------------------------------------------------------
(Unaudited) ($ millions) October July October October October
(Taxable equivalent 31 31 31 31 31 basis)(1) 2005 2005 2004 2005
2004
-------------------------------------------------------------------------
Business line income Net interest income $ 201 $ 202 $ 229 $ 849 $
937 Provision for credit losses (7) 2 (25) (71) 106 Other income
338 316 258 1,320 1,227 Non-interest expenses 198 214 202 929 960
Provision for income taxes 117 100 72 390 275
-------------------------------------------------------------------------
Net Income $ 231 $ 202 $ 238 $ 921 $ 823 Preferred dividends paid 2
2 1 6 4
-------------------------------------------------------------------------
Net income available to common shareholders(2) $ 229 $ 200 $ 237 $
915 $ 819
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other measures Return on equity(3) 27.4% 24.7% 25.3% 28.4% 20.3%
Average Assets ($ billions) $ 114 $ 114 $ 103 $ 112 $ 109
-------------------------------------------------------------------------
-------------------------------------------------------------------------
International Banking For the three months ended For the year ended
-------------------------------------------------------------------------
(Unaudited) ($ millions) October July October October October
(Taxable equivalent 31 31 31 31 31 basis)(1) 2005 2005 2004 2005
2004
-------------------------------------------------------------------------
Business line income Net interest income $ 506 $ 512 $ 444 $ 1,969
$ 1,858 Provision for credit losses 16 21 43 70 70 Other income 202
237 189 793 741 Non-interest expenses 486 447 400 1,712 1,606
Provision for income taxes 10 28 17 103 126 Non-controlling
interest in net income of subsidiaries 20 17 13 71 75
-------------------------------------------------------------------------
Net Income $ 176 $ 236 $ 160 $ 806 $ 722 Preferred dividends paid 2
2 1 6 4
-------------------------------------------------------------------------
Net income available to common shareholders(2) $ 174 $ 234 $ 159 $
800 $ 718
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other measures Return on equity(3) 17.5% 24.1% 18.4% 21.6% 21.7%
Average Assets ($ billions) $ 51 $ 51 $ 49 $ 50 $ 49
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to footnote (2) further below. (2) Refer to footnote (4)
further below. (3) Refer to footnote (5) further below. Other(1)
For the three months ended For the year ended
-------------------------------------------------------------------------
(Unaudited) ($ millions) October July October October October
(Taxable equivalent 31 31 31 31 31 basis)(2) 2005 2005 2004 2005
2004
-------------------------------------------------------------------------
Business line income Net interest income(3) $ (130) $ (139) $ (146)
$ (523) $ (588) Provision for credit losses (42) (1) (52) (43)
(103) Other income 140 122 133 597 681 Non-interest expenses 25 31
14 106 79 Provision for income taxes(3) (49) (72) (33) (212) (137)
-------------------------------------------------------------------------
Net Income $ 76 $ 25 $ 58 $ 223 $ 254 Preferred dividends paid 2 3
1 7 4
-------------------------------------------------------------------------
Net income available to common shareholders(4) $ 74 $ 22 $ 57 $ 216
$ 250
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other measures Average Assets ($ billions) $ 25 $ 25 $ 13 $ 24 $ 14
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total For the three months ended For the year ended
-------------------------------------------------------------------------
October July October October October (Unaudited) 31 31 31 31 31 ($
millions) 2005 2005 2004 2005 2004
-------------------------------------------------------------------------
Business line income Net interest income $ 1,506 $ 1,480 $ 1,388 $
5,871 $ 5,701 Provision for credit losses 36 85 40 230 390 Other
income 1,154 1,128 996 4,529 4,320 Non-interest expenses 1,579
1,517 1,461 6,043 5,862 Provision for income taxes 214 205 165 847
786 Non-controlling interest in net income of subsidiaries 20 17 13
71 75
-------------------------------------------------------------------------
Net Income $ 811 $ 784 $ 705 $ 3,209 $ 2,908 Preferred dividends
paid 8 9 4 25 16
-------------------------------------------------------------------------
Net income available to common shareholders $ 803 $ 775 $ 701 $
3,184 $ 2,892
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other measures Return on equity(5) 20.5% 19.9% 18.8% 20.9% 19.9%
Average Assets ($ billions) $ 317 $ 314 $ 282 $ 309 $ 284
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Includes all other smaller operating segments and corporate
adjustments, such as the elimination of the tax-exempt income
gross-up reported in net interest income and provision for income
taxes, differences in the actual amount of costs incurred and
charged to the operating segments, and the impact of
securitizations. (2) The Bank, like some other banks, analyzes
revenues, net interest margin on total average assets and the
productivity ratio on a taxable equivalent basis (TEB). This
methodology grosses up tax-exempt income earned on certain
securities to an equivalent before-tax basis. In the presentation
of business line results, the corresponding offset is made in the
provision for income taxes. Management believes that this basis for
measurement provides a uniform comparability of net interest income
arising from both taxable and non-taxable sources and facilitates a
consistent basis of measurement. This use of TEB results in
measures that are different from comparable GAAP measures and may
not be the same as measures presented by other companies. (3)
Includes the elimination of the tax-exempt income gross-up reported
in net interest income and provision for income taxes for the three
months ended October 31, 2005 ($75), July 31, 2005 ($81), October
31, 2004 ($73), and for the year ended October 31, 2005 ($326), and
October 31, 2004 ($274), to arrive at the amounts reported in the
Consolidated Statement of Income. (4) Commencing in 2005, the
measure of segment profitability has been changed from net income
to net income available to common shareholders. Prior periods have
been restated. (5) For management and internal reporting purposes,
the Bank allocates equity to its business lines using a methodology
that considers credit, market and operational risk inherent in each
business line. Return on equity is calculated based on the economic
equity allocated to the business line. Economic equity is not a
defined term under GAAP and, accordingly, the resulting return on
equity for each business line may not be comparable to those used
by other financial institutions. Geographic Highlights For the
three months ended For the year ended
-------------------------------------------------------------------------
October July October October October 31 31 31 31 31 (Unaudited)
2005 2005 2004 2005 2004
-------------------------------------------------------------------------
Net income available to common shareholders ($ millions) Canada $
500 $ 472 $ 391 $ 1,907 $ 1,632 United States 82 50 90 312 335
Other international 196 269 184 1,027 920 Corporate adjustments 25
(16) 36 (62) 5
-------------------------------------------------------------------------
$ 803 $ 775 $ 701 $ 3,184 $ 2,892
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average Assets ($ billions) Canada $ 210 $ 207 $ 189 $ 205 $ 188
United States 26 26 19 25 21 Other international 78 78 72 76 73
Corporate adjustments 3 3 2 3 2
-------------------------------------------------------------------------
$ 317 $ 314 $ 282 $ 309 $ 284
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Impact of foreign currency translation The movement in foreign
currency exchange rates continued to have a negative effect on the
Bank's earnings in 2005, although to a lesser extent than last
year. The Canadian dollar appreciated relative to the U.S. dollar
by 8%, and against the Mexican peso by 5%. The dollar also
strengthened against the Jamaican dollar and many other currencies
in which the Bank conducts its business. Changes in the average
exchange rates affected net income as shown in the following table:
------------------------------------------------------------------
Average exchange rate 2005 2004 2003
------------------------------------------------------------------
U.S. dollar/Canadian dollar 0.8217 0.7586 0.6936 Mexican
peso/Canadian dollar 9.0523 8.5968 7.3388
------------------------------------------------------------------
Impact on income ($ millions) 2005 vs. 2004 2004 vs. 2003
------------------------------------------------------------------
Net interest income $ (164) $ (321) Other income (123) (212)
Non-interest expenses 95 227 Other items (net of tax) 47 96
-------------------------------- Net income $ (145) $ (210) EPS
(diluted) $ (0.14) $ (0.21)
------------------------------------------------------------------
We will continue to take appropriate action to mitigate the effect
of foreign currency translation where it is cost-effective to do
so. Consolidated Financial Statements Consolidated Statement of
Income For the three months ended For the year ended
-------------------------------------------------------------------------
October July October October October (Unaudited) 31 31 31 31 31 ($
millions) 2005 2005 2004(1) 2005 2004(1)
-------------------------------------------------------------------------
Interest income Loans $ 2,653 $ 2,584 $ 2,291 $ 10,053 $ 9,074
Securities 801 807 647 3,104 2,662 Deposits with banks 186 173 120
646 441
-------------------------------------------------------------------------
3,640 3,564 3,058 13,803 12,177
-------------------------------------------------------------------------
Interest expense Deposits 1,541 1,500 1,258 5,755 4,790
Subordinated debentures 34 34 30 134 112 Capital instrument
liabilities 13 13 38 53 164 Other 546 537 344 1,990 1,410
-------------------------------------------------------------------------
2,134 2,084 1,670 7,932 6,476
-------------------------------------------------------------------------
Net interest income 1,506 1,480 1,388 5,871 5,701 Provision for
credit losses 36 85 40 230 390
-------------------------------------------------------------------------
Net interest income after provision for credit losses 1,470 1,395
1,348 5,641 5,311
-------------------------------------------------------------------------
Other income Card revenues 67 66 59 251 231 Deposit and payment
services 181 184 161 701 646 Mutual funds 52 50 44 193 171
Investment management, brokerage and trust services 159 143 113 600
504 Credit fees 131 140 143 542 583 Trading revenues 126 133 118
594 476 Investment banking 171 162 144 680 648 Net gain on
investment securities 109 109 54 414 477 Securitization revenues 19
21 26 79 111 Other 139 120 134 475 473
-------------------------------------------------------------------------
1,154 1,128 996 4,529 4,320
-------------------------------------------------------------------------
Net interest and other income 2,624 2,523 2,344 10,170 9,631
-------------------------------------------------------------------------
Non-interest expenses Salaries and employee benefits 861 874 829
3,488 3,452 Premises and technology 302 288 293 1,148 1,139
Communications 66 66 67 255 248 Advertising and business
development 81 58 59 232 210 Professional 55 44 48 186 163 Business
and capital taxes 30 38 32 147 142 Other 184 149 133 587 508
-------------------------------------------------------------------------
1,579 1,517 1,461 6,043 5,862
-------------------------------------------------------------------------
Income before the undernoted 1,045 1,006 883 4,127 3,769 Provision
for income taxes 214 205 165 847 786 Non-controlling interest in
net income of subsidiaries 20 17 13 71 75
-------------------------------------------------------------------------
Net income $ 811 $ 784 $ 705 $ 3,209 $ 2,908
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Preferred dividends paid 8 9 4 25 16
-------------------------------------------------------------------------
Net income available to common shareholders $ 803 $ 775 $ 701 $
3,184 $ 2,892
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average number of common shares outstanding (millions): Basic 995
995 1,008 998 1,010 Diluted 1,008 1,009 1,024 1,012 1,026
-------------------------------------------------------------------------
Earnings per common share(2) (in dollars): Basic $ 0.81 $ 0.78 $
0.70 $ 3.19 $ 2.87 Diluted $ 0.80 $ 0.77 $ 0.69 $ 3.15 $ 2.82
-------------------------------------------------------------------------
Dividends per common share (in dollars) $ 0.34 $ 0.34 $ 0.30 $ 1.32
$ 1.10
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Certain comparative amounts have been retroactively restated
for new CICA accounting requirements relating to the distinction
between equity and liability instruments. (2) The calculation of
earnings per share is based on full dollar and share amounts. See
Basis of preparation and New accounting policies below.
Consolidated Balance Sheet As at
-------------------------------------------------------------------------
October July October 31 31 31 (Unaudited) ($ millions) 2005 2005
2004(1)
-------------------------------------------------------------------------
Assets Cash resources Cash and non-interest-bearing deposits with
banks $ 2,501 $ 2,072 $ 1,921 Interest-bearing deposits with banks
15,182 17,736 12,932 Precious metals 2,822 2,327 2,302
-------------------------------------------------------------------------
20,505 22,135 17,155
-------------------------------------------------------------------------
Securities Investment 23,452 23,235 15,717 Trading 50,007 50,541
43,056
-------------------------------------------------------------------------
73,459 73,776 58,773
-------------------------------------------------------------------------
Loans Residential mortgages 75,520 73,867 69,018 Personal and
credit cards 34,695 33,981 30,182 Business and government 62,681
63,604 57,384 Securities purchased under resale agreements 20,578
23,290 17,880
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193,474 194,742 174,464 Allowance for credit losses 2,469 2,565
2,696
-------------------------------------------------------------------------
191,005 192,177 171,768
-------------------------------------------------------------------------
Other Customers' liability under acceptances 7,576 7,353 7,086
Trading derivatives' market valuation 11,622 11,334 14,198 Land,
buildings and equipment 1,934 1,947 1,872 Goodwill 498 546 261
Other intangible assets 235 219 240 Other assets 7,191 8,046 7,859
-------------------------------------------------------------------------
29,056 29,445 31,516
-------------------------------------------------------------------------
$ 314,025 $ 317,533 $ 279,212
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and shareholders' equity Deposits Personal $ 83,953 $
83,840 $ 79,020 Business and government 109,389 111,257 94,125
Banks 24,103 24,912 22,051
-------------------------------------------------------------------------
217,445 220,009 195,196
-------------------------------------------------------------------------
Other Acceptances 7,576 7,353 7,086 Obligations related to
securities sold under repurchase agreements 26,032 27,003 19,428
Obligations related to securities sold short 11,250 9,976 7,585
Trading derivatives' market valuation 11,193 12,049 14,054 Other
liabilities 20,794 21,277 15,733 Non-controlling interest in
subsidiaries 306 296 280
-------------------------------------------------------------------------
77,151 77,954 64,166
-------------------------------------------------------------------------
Subordinated debentures 2,597 2,617 2,615
-------------------------------------------------------------------------
Capital instrument liabilities 750 750 2,250
-------------------------------------------------------------------------
Shareholders' equity Capital stock Preferred shares 600 600 300
Common shares and contributed surplus 3,317 3,314 3,229 Retained
earnings 14,126 13,909 13,239 Cumulative foreign currency
translation (1,961) (1,620) (1,783)
-------------------------------------------------------------------------
16,082 16,203 14,985
-------------------------------------------------------------------------
$ 314,025 $ 317,533 $ 279,212
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Certain comparative amounts have been retroactively restated
for new CICA accounting requirements relating to the distinction
between equity and liability instruments. See Basis of preparation
and New accounting policies on pages below. Consolidated Statement
of Changes in Shareholders' Equity For the year ended
-------------------------------------------------------------------------
October October 31 31 (Unaudited) ($ millions) 2005 2004(1)
-------------------------------------------------------------------------
Preferred shares Balance at beginning of year $ 300 $ 300 Issued
300 -
-------------------------------------------------------------------------
Balance at end of year 600 300
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Common shares and contributed surplus Common shares: Balance at
beginning of year 3,228 3,140 Issued 172 117 Purchased for
cancellation (84) (29)
-------------------------------------------------------------------------
Balance at end of year 3,316 3,228 Contributed surplus: Fair value
of stock options 1 1
-------------------------------------------------------------------------
Total 3,317 3,229
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings Balance at beginning of year 13,239 11,747 Net
income 3,209 2,908 Dividends: Preferred (25) (16) Common (1,317)
(1,110) Purchase of shares (973) (290) Other (7) -
-------------------------------------------------------------------------
Balance at end of year 14,126 13,239
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cumulative foreign currency translation Balance at beginning of
year (1,783) (1,074) Net unrealized foreign exchange translation
losses(2) (178) (709)
-------------------------------------------------------------------------
Balance at end of year (1,961) (1,783)
-------------------------------------------------------------------------
Total shareholders' equity at end of year $ 16,082 $ 14,985
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Certain comparative amounts have been retroactively restated
for new CICA accounting requirements relating to the distinction
between equity and liability instruments. (2) Comprises unrealized
foreign exchange translation losses on net investments in
self-sustaining foreign operations of $(416) (2004 - $(1,085)) and
gains from related foreign exchange hedging activities of $238
(2004 - $376). See Basis of preparation and New accounting policies
below. Condensed Consolidated Statement of Cash Flows For the three
months ended For the year ended
-------------------------------------------------------------------------
Sources and (uses) October October October October of cash flows 31
31 31 31 (Unaudited) ($ millions) 2005 2004(1) 2005 2004(1)
-------------------------------------------------------------------------
Cash flows from operating activities Net income $ 811 $ 705 $ 3,209
$ 2,908 Adjustments to net income to determine cash flows (232) 33
(213) 42 Net accrued interest receivable and payable (199) 120
(204) (103) Trading securities (71) 1,860 (7,014) (1,514) Trading
derivatives' market valuation, net (1,193) (14) (400) 350 Other,
net 505 (204) 1,300 (718)
-------------------------------------------------------------------------
(379) 2,500 (3,322) 965
-------------------------------------------------------------------------
Cash flows from financing activities Deposits 455 592 22,282 8,106
Obligations related to securities sold under repurchase agreements
(294) (2,778) 6,676 (8,011) Obligations related to securities sold
short 1,307 (3,733) 3,693 (1,528) Capital instrument liabilities
redemptions/ repayments - - - (260) Capital stock issued 24 26 416
114 Capital stock redeemed/ purchased for cancellation (269) (45)
(1,057) (319) Cash dividends paid (346) (306) (1,342) (1,126)
Other, net 262 130 806 (230)
-------------------------------------------------------------------------
1,139 (6,114) 31,474 (3,254)
-------------------------------------------------------------------------
Cash flows from investing activities Interest-bearing deposits with
banks 1,988 2,890 (2,814) 3,483 Loans, excluding securitizations
(1,988) (1,216) (23,910) (7,998) Loan securitizations 475 779 2,153
3,514 Investment securities, net (697) 1,822 (2,521) 4,655 Land,
buildings and equipment, net of disposals (62) (89) (168) (228)
Other, net(2) 3 - (276) (59)
-------------------------------------------------------------------------
(281) 4,186 (27,536) 3,367
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (50)
(62) (36) (54)
-------------------------------------------------------------------------
Net change in cash and cash equivalents 429 510 580 1,024 Cash and
cash equivalents at beginning of period 2,072 1,411 1,921 897
-------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 2,501 $ 1,921 $ 2,501
$ 1,921
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash disbursements made for: Interest $ 2,352 $ 1,556 $ 8,142 $
6,581 Income taxes $ 276 $ 186 $ 907 $ 751
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Certain comparative amounts have been retroactively restated
for new CICA accounting requirements relating to the distinction
between equity and liability instruments. (2) For the year ended
October 31, 2005, comprises investments in subsidiaries which are
net of non-cash consideration consisting of common shares issued
from treasury of $49 (2004 - nil) and cash and cash equivalents at
the date of acquisition of $17 (2004 - nil). See Basis of
preparation and New accounting policies below. Basis of preparation
These unaudited consolidated financial statements have been
prepared in accordance with Canadian generally accepted accounting
principles (GAAP), except for certain required disclosures.
Therefore, these consolidated financial statements should be read
in conjunction with the Bank's audited consolidated financial
statements for the year ended October 31, 2004. The accounting
policies used in the preparation of these consolidated financial
statements are consistent with those used in the 2004 year-end
statements except as described below. Certain comparative amounts
have been reclassified to confirm with the current period's
accounting presentation. New accounting policies Consolidation of
variable interest entities Effective November 1, 2004, the Bank
adopted a new accounting guideline issued by the Canadian Institute
of Chartered Accountants (CICA), which requires consolidation of
variable interest entities (VIEs) by the primary beneficiary. An
entity is a VIE when, by design, one or both of the following
conditions exist: (a) total equity investment at risk is
insufficient to permit the entity to finance its activities without
additional subordinated support from others; (b) as a group, the
holders of the equity investment at risk lack certain essential
characteristics of a controlling financial interest. The VIE
guideline also exempts certain entities from its scope. The primary
beneficiary is the enterprise that absorbs or receives the majority
of the VIE's expected losses, expected residual returns, or both.
Investments in VIEs where the Bank has significant influence, but
where the Bank is not the primary beneficiary, are accounted for
using the equity method. On adoption of this new accounting
guideline, the Bank assessed that it was the primary beneficiary of
multi-seller commercial paper conduit programs which it
administers, and consolidated these conduits in its financial
statements. As a result, investment securities, personal and credit
card loans, and other liabilities on the Consolidated Balance Sheet
increased by $5 billion, $3 billion, and $8 billion, respectively.
The Bank also assessed that it is not the primary beneficiary of
Scotiabank Capital Trust. As a result, on adoption of this new
accounting guideline, the Bank deconsolidated this entity on a
prospective basis, with the effect of reclassifying $1.5 billion of
obligations to business and government deposit liabilities from
capital instrument liabilities in the Consolidated Balance Sheet.
There were other structures that the Bank consolidated on adoption
of this new accounting guideline. However, the resulting increase
in total assets and liabilities was insignificant. The adoption of
this new accounting change did not affect net income available to
common shareholders or earnings per share. Liabilities and equity
Effective November 1, 2004, the Bank, as required, retroactively
adopted, with restatement of prior periods, a new pronouncement
issued by the CICA amending the accounting for certain financial
instruments that have the characteristics of both a liability and
equity. This pronouncement requires those instruments that must or
can be settled by issuing a variable number of the issuer's own
equity instruments to be presented as liabilities rather than as
equity. This pronouncement affected $2 billion of Scotiabank Trust
Securities issued through BNS Capital Trust and Scotiabank Capital
Trust, and $250 million of preferred shares issued by Scotia
Mortgage Investment Corporation. These instruments were
retroactively reclassified from non- controlling interest in
subsidiaries and shareholders' equity, respectively, to capital
instrument liabilities. As well for fiscal 2004, disbursements of
$164 million (2003 - $182 million) associated with these
instruments were retroactively reclassified as interest expense,
whereas prior to fiscal 2005, such disbursements were recorded as
non-controlling interest in net income of subsidiaries of $134
million (2003 - $120 million), preferred dividends of $23 million
(2003 - $55 million), and provision for income taxes of $7 million
(2003 - $7 million). Furthermore, effective November 1, 2004, in
accordance with a new Canadian accounting pronouncement related to
VIEs, $1.5 billion of Scotiabank Trust Securities were reclassified
prospectively to deposit liabilities in the Consolidated Balance
Sheet (see the above changes in accounting policy regarding the
consolidation of variable interest entities). In all cases, there
was no change to net income available to common shareholders or
earnings per share. As well, the Bank's risk-based regulatory
capital ratios were not affected, as the Bank's innovative Tier 1
capital instruments remain eligible as Tier 1 capital for
regulatory purposes. Share Data As at
-------------------------------------------------------------------------
October 31 (thousands of shares) 2005
-------------------------------------------------------------------------
Class A preferred shares issued by Scotia Mortgage Investment
Corporation 250(1) Series 2000-1 trust securities issued by BNS
Capital Trust 500(1) Series 2002-1 trust securities issued by
Scotiabank Capital Trust 750(2) Series 2003-1 trust securities
issued by Scotiabank Capital Trust 750(2)
-------------------------------------------------------------------------
Preferred shares Series 12 12,000(3) Preferred shares Series 13
12,000(4) Common shares outstanding 990,182(5)(6) Outstanding
options granted under the Stock Option Plans to purchase common
shares 37,582(5)(7)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Reported in capital instrument liabilities in the Consolidated
Balance Sheet. (2) Reported in business and government deposits in
the Consolidated Balance Sheet. (3) These shares are entitled to
non-cumulative preferential cash dividends payable quarterly in an
amount of $0.328125 per share. (4) These shares are entitled to
non-cumulative preferential cash dividends payable quarterly. The
initial dividend paid July 27, 2005, was $0.4405 per share.
Subsequent quarterly dividends will be $0.30 per share. (5) As at
November 17, 2005, the number of outstanding common shares and
options were 990,203 and 37,561, respectively. The number of other
securities disclosed in this table were unchanged. (6) Includes
1,195 shares issued from treasury in June 2005 related to an
acquisition of a subsidiary. (7) Included are 15,275 stock options
with tandem stock appreciation right (SAR) features. Shareholder
& Investor Information Direct deposit service Shareholders may
have dividends deposited directly into accounts held at financial
institutions that are members of the Canadian Payments Association.
To arrange direct deposit service, please write to the Transfer
Agent. Dividend and Share Purchase Plan Scotiabank's dividend
reinvestment and share purchase plan allows common and preferred
shareholders to purchase additional common shares by reinvesting
their cash dividend without incurring brokerage or administrative
fees. As well, eligible shareholders may invest up to $20,000 each
fiscal year to purchase additional common shares of the Bank.
Debenture holders may apply interest on fully registered Bank
subordinated debentures to purchase additional common shares. All
administrative costs of the plan are paid by the Bank. For more
information on participation in the plan, please contact the
Transfer Agent. Dividend dates for 2006 Record and payment dates
for common and preferred shares, subject to approval by the Board
of Directors. Record Date Payment Date January 3 January 27 April 4
April 26 July 4 July 27 October 3 October 27 Duplicated
communication If your shareholdings are registered under more than
one name or address, multiple mailings will result. To eliminate
this duplication, please write to the Transfer Agent to combine the
accounts. World Wide website For information relating to Scotiabank
and its services, visit us at our website:
http://www.scotiabank.com/. Conference call and web broadcast The
conference call will take place on Tuesday, November 29, 2005, at
3:00 p.m. EST, and is expected to last approximately one hour.
Interested parties are invited to access the call live, in
listen-only mode, by telephone toll-free, at 1-800-814-3911 (please
call five to 15 minutes in advance). In addition, an audio webcast,
with accompanying slide presentations, may be accessed via the
Internet on the Investor Relations page of
http://www.scotiabank.com/. During the call, listeners may also
wish to refer to the Quarterly Results information displayed on the
Investor Relations page of http://www.scotiabank.com/. Following
discussion of the results by Scotiabank executives, there will be a
question and answer session. Listeners are also invited to submit
questions by e-mail, to . A telephone replay of the call will be
available between November 29, 2005, and December 13, 2005, by
calling (416) 640-1917 (identification code 21160057 followed by
the number sign). The archived audio webcast will be available on
the Investor Relations page of http://www.scotiabank.com/ from
approximately 6:00 p.m. EST on November 29, 2005, for three months.
Annual Meeting of Shareholders The Bank's Annual Meeting of
Shareholders will be held at the Fairmont Hotel in Winnipeg,
Manitoba on March 3, 2006. The record date for determining
shareholders entitled to receive notice of the meeting will be the
close of business on January 13, 2006. Forward-looking statements
This document includes forward-looking statements which are made
pursuant to the "safe harbour" provisions of the United States
Private Securities Litigation Reform Act of 1995. These statements
include comments with respect to the Bank's objectives, strategies
to achieve those objectives, expected financial results (including
those in the area of risk management), and the outlook for the
Bank's businesses and for the Canadian, United States and global
economies. Forward-looking 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",
"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. The Bank cautions readers not to place undue
reliance on these statements, as a number of important factors
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; the effect of changes in monetary
policy; legislative and regulatory developments in Canada and
elsewhere; operational and reputational risks; 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; changes in accounting policies and methods the Bank
uses to report its financial condition and the results of its
operations, including uncertainties associated with critical
accounting assumptions and estimates; the effect of applying future
accounting changes; 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; consolidation in the Canadian
financial services sector; changes in tax laws; competition, both
from new entrants and established competitors; judicial and
regulatory proceedings; acts of God, such as earthquakes; the
possible impact of international conflicts and other developments
including terrorist acts and war on terrorism; the effects of
disease or illness on local, national or international economies;
disruptions to public infrastructure, including transportation,
communication, power and water; 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 on risks the Bank faces, please
see the Risk Management section starting on page 54 of the Bank's
2004 Annual Report. The Bank cautions that the foregoing list of
important factors is not exhaustive. When relying on
forward-looking statements to make decisions with respect to the
Bank and its securities, investors and others should carefully
consider the foregoing 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 behalf of the Bank. Additional information relating
to the Bank, including the Bank's Annual Information Form, can be
located on the SEDAR website at http://www.sedar.com/, and on the
EDGAR section of the SEC's website at http://www.sec.gov/. General
information Information on your shareholdings and dividends may be
obtained by writing to the Bank's Transfer Agent: Computershare
Trust Company of Canada 100 University Ave., 9th Floor Toronto,
Ontario, Canada M5J 2Y1 Telephone: 1-877-982-8767 Fax:
1-888-453-0330 E-mail: Financial analysts, portfolio managers and
other investors requiring financial information, please contact
Investor Relations, Finance Department: Scotiabank Scotia Plaza 44
King Street West, Toronto, Ontario, Canada M5H 1H1 Telephone: (416)
866-5982 Fax: (416) 866-7867 E-mail: For other information and for
media inquiries, please contact the Public and Corporate Affairs
Department at the above address. Telephone: (416) 866-3925 Fax:
(416) 866-4988 E-mail: The Bank of Nova Scotia is incorporated in
Canada with limited liability. Le Rapport annuel et les etats
financiers periodiques de la Banque sont publies en francais et en
anglais et distribues aux actionnaires dans la version de leur
choix. Si vous preferez que la documentation vous concernant vous
soit adressee en francais, veuillez en informer le Service des
relations publiques de la Banque Scotia, Scotia Plaza, 44, rue King
Ouest, Toronto (Ontario), Canada M5H 1H1, en joignant, si possible
l'etiquette d'adresse, afin que nous puissions prendre note du
changement. Scotiabank is one of North America's premier financial
institutions and Canada's most international bank. With more than
50,000 employees, Scotiabank Group and its affiliates serve about
10 million customers in some 50 countries around the world.
Scotiabank offers a diverse range of products and services
including personal, commercial, corporate and investment banking.
With $314 billion in assets (as at October 31, 2005), Scotiabank
trades on the Toronto (BNS) and New York Exchanges (BNS). For more
information please visit http://www.scotiabank.com/. DATASOURCE:
Scotiabank - Financial Releases CONTACT: Luc Vanneste, Executive
Vice-President and Chief Financial Officer, (416) 933-3250; Kevin
Harraher, Vice-President, Investor Relations, (416) 866-5982; Frank
Switzer, Director, Public Affairs, (416) 866-7238
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