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2014 Annual Report What it means to be Canada’s most international bank 1 Financial Highlights (1) (1) As at and for the ﬁscal years ended October 31 2014 2013 2012 2011 Operating results ($ millions) Net income 7,298 6,610 6,390 5,330 Operating performance Diluted earnings per share ($) 5.66 5.11 5.18 4.53 Return on equity (%)(2) 16.1 16.6 19.9 20.3 Productivity ratio (%) (TEB(2)) 52.6 54.0 52.4 53.9 Balance sheet information ($ millions) Total assets 805,666 743,644 668,225 594,423 Capital measures(1)(3) Common Equity Tier 1 (CET1) ratio (%) 10.8 9.1 n/a n/a Total capital ratio (%) 13.9 13.5 16.7 13.9 Common share information Annual shareholder return (%) 13.2 21.7 7.6 (0.4) 10-year compound annual return (%) 9.9 10.9 13.0 13.1 Market capitalization ($ millions) (TSX) 83,969 76,612 64,252 57,204 Dividends per share ($) 2.56 2.39 2.19 2.05 Dividend yield (%)(4) 3.8 4.1 4.2 3.7 Book value per common share ($) 36.96 33.23 28.99 24.20 Price to earnings multiple 12.1 12.3 10.3 11.3 (1) Certain prior period amounts are retrospectively adjusted to reflect the adoption of new and amended IFRS standards (IFRS10 and IAS19) in 2014 (refer to Note 4 in the consolidated financial statements). Capital measures have not been restated for the new and amended IFRS standards as they represent the actual amounts in the period for regulatory purposes. (2) Non-GAAP measures. Refer to non-GAAP measures on page 17. (3) Effective November 1, 2012, regulatory capital ratios are determined in accordance with Basel III rules on an all-in basis (Refer to page 41). Comparative amounts for prior periods were determined in accordance with Basel II rules and have not been restated. (4) Based on the average of the high and low common share price for the year. Contents 2 Message from Chairman of the Board 10 Board of Directors 14 Management’s Discussion and Analysis Thomas C. O’Neill 12 Message from Chief Financial Officer 117 Consolidated FinancialStatements 3 Message from President and SeanMcGuckin Chief Executive Officer Brian Porter Getting Kids in the Game 13 Reasons to Invest in Scotiabank – (see inside back cover) 8 Executive Management Team MD&A at a Glance Scotiabank serves more than 21 million customers in over 55 countries Mexico-based Divemex has been a Scotiabank customer for about 14 years. The family-owned company produces organic, conventional, green and mini peppers for the North American market and is renowned for bringing fair trade certification to Mexico’s horticulture industry. Read more and watch the video at media.scotiabank.com/AR/2014/en. Shown here: Jorge Beckmann, President, Divemex (centre) with Scotiabankers Joaquin Gandara (right) and Jorge Cuenca (left) at one of the company’s greenhouses in Jalisco, Mexico. Annual Report Online Alternative formats Go online for a more detailed For information on how to obtain the version of this report, including annual report in alternative formats, customer videos. please go to: media.scotiabank.com/AR/2014/en http://www.scotiabank.com/ca/ en/0,,379,00.html Message from Thomas O’Neill Chairman of Scotiabank’s 2 the Chairman Board of Directors Dear Fellow Shareholders, We continued to work hard in 2014 to achieve solid results for you. This year, under Brian Porter’s leadership, the Bank increased its focus on customers, leadership and talent, and being better organizedtoserve customers while reducing structural costs. These are areas we know drive stronger growth and have the greatest impactonshareholder value. Scotiabank’s proven strategy – well executed by a We welcomed two new Directors to your Board strong management team and more than 86,000 this year: Guillermo Babatz and Nora Aufreiter. employees – contributed to consistent earnings Guillermo’s experience, particularly in Latin growth for all shareholders. America, contributes a unique perspective in light of the Bank’s international footprint. Nora’s GUIDED BY GOVERNANCE industry knowledge, acquired through a lengthy internationalmanagement consulting career Effective corporate governanceisan important focusing on consumer-facing industries, also adds foundation for Scotiabank’s strong performance tremendous value. and is fundamental to our success. Corporate governance provides proper oversight and accountability, strengthens internal and external POSITIONED FOR LONG-TERM SUCCESS relationships, builds trust with our stakeholders and Canada’s banks have once again been named among promotes the long-term interests of shareholders. the soundest in the world by the World Economic Forum. This speaks to the strength and stability of In 2014, your Board expanded its commitment Canada’s banking system, based on a robust risk to diversity. In fact, female directors now culture and well-articulated risk appetite. With represent more than30% of the Board, a Scotiabank’s sound strategy and strong leaders, reflection of our policythat also considers the Ihave every confidencethat we will continue to age, ethnicity and geographical background of build on our 183-yearrecord of success. prospective new members. I would like to thank our President and CEO Brian We also continued our focus on Board independence Porter, his leadership team and the thousands of with 14 of our 15 members independent of the Bank. Scotiabankers around the world who help the Bank’s 21 million customers become financially better off. A HISTORY OF STRONG LEADERSHIP I am truly privileged to work with this team, which I am honoured to succeed your past Chairman, brings commitment and enthusiasm to work each John Mayberry, who retired this year after a 20-year day–and carries it forward to enrich their term as a Board member. John’s leadership and communities. foresight guided us through some exceptionally And finally, thank you, shareholders, for your challenging years for the globalfinancial industry. confidence in us, which helps fuel the momentum I would like to thank John for his leadership and towards an ever brighter future for Canada’s most distinguished service to you. international bank. 2 2014 Scotiabank Annual Report CEO Brian Porter President and 3 Message Chief Executive Ofﬁcer Dear Fellow Shareholders, It is my pleasure to write to you asweembark on Scotiabank’s 184th year, my second as President and CEO of your Bank. 2014 was a productive yearforScotiabank. Before getting into the details, including our financial performance and the important steps we are taking to become anevenbetter bank, I would like to share a few observations about the past year. Over the past 12 months, I met with many of our which in turn, further enhances the Bank’s shareholders, customers, key stakeholders and growth potential and diversification. In fact, more employees around the world. These interactions thanhalf of the Bank’s earnings are generated in made it clearthattheBank is widely viewed as Canada, with the remainder coming from our having a strong global industry position with operations internationally. Our earnings are excellent opportunities for growth. Our strategy is further diversified between well-balanced clear and well understood. Our customers appreciate businesses and customer segments. the knowledge, expertise and commitment of our For more than 125 years, Scotiabank has people. And there is greatprideinbeing Canada’s successfully operated with a meaningful most international bank. international footprint. Today, we have operations in North America,Latin America, the CANADA’S MOST INTERNATIONAL BANK Caribbean&Central America and parts of Asia. We use this footprint to help our customers in I firmly believe that the combination of Scotiabank’s other markets thathave attractive economic focused strategy and diversified business model, fundamentals and strong growth prospects. which is unique among our competitors, will create Increasingly, we add value to our business long-term value for our shareholders. customers by delivering the full capabilities We have a strong and growing foundation. We are of Scotiabank in key internationalmarkets – the third largest bank in Canadaand among the 25 particularly the four Pacific Alliance countries largest and soundest banks in the world. The Bank’s of Mexico, Peru, Colombiaand Chile. strength in Canada provides a solid foundation for our significant operations in select internationalmarkets, 56% 7% CANADA U.S. % OF INCOME CANADA, U.S. & OTHER INTERNATIONAL * excluding a notable gain in Q3 2014 37% OTHER INTERNATIONAL 2014 Scotiabank Annual Report 3 Innovative partnerships that offer customers more choice Our commitment to stakeholders: education in Canadaand providing financial services to In recent years, financial services companies around the vulnerable communities in parts of Latin America. world have experienced several different challenges. We Last year, your Bank continued to invest in communities are proud of our successful trackrecord of balancing the where our customers and Scotiabankers live and work. In interests of our stakeholders, including shareholders, addition to the donations and sponsorships we have made customers, employees and the communities in whichwe supporting charitable and non-profit organizations, live and work. Scotiabank employees volunteered more than 650,000 hours in their communities. We have a strong foundation of integrity, trust, and ethical behaviour in all of our businesses. Our common equity PERFORMANCE VERSUS Tier 1 capitalratio is among the strongest in the world. MEDIUM-TERM OBJECTIVES This financial strength ensures thatweare able to fulfill our In 2014, we measured ourselves against some key fiduciary responsibility of keeping our customers’ financial medium-term financialobjectives. By moving to medium- assets safe. Combined with our unique international term objectives, rather than annualtargets, we signalled footprint, our strong foundation allows us to prudently the importanceweplaceoncreating sustainable, longer- lend to individuals as well as businesses of all sizes. By term shareholder value. doing so, we create jobs, drive economic opportunity and – most importantly – help our customers to be As you will see in this annual report, we performed within financially better off.

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