Scotiabank reports strong first quarter earnings of $1.6 billion and increases dividend

Scotiabank reports strong first quarter earnings of $1.6 billion and increases
                                   dividend

PR Newswire

TORONTO, March 5, 2013

All amounts are in Canadian dollars and are based on our unaudited Interim
Condensed Consolidated Financial Statements for the quarter January 31, 2013
and related notes prepared in accordance with International Financial
Reporting Standards (IFRS), unless otherwise noted. Our First Quarter 2013
Report to Shareholders and Supplementary Financial Information are available
on the Investor Relations page of www.scotiabank.com.

Additional information relating to the Bank, including the Bank's Annual
Information Form, can be found on the SEDAR website at www.sedar.com and on
the EDGAR section of the SEC's website at www.sec.gov.



First quarter financial measures compared to the same period a year ago:

  *Earnings per share (diluted) of $1.25, compared to $1.20
  *Net income of $1,625 million, versus $1,436 million
  *Return on equity of 16.6%, compared to 19.8%
  *Productivity ratio of 53.5%, same as last year
  *Quarterly dividend increased by 3 cents to 60 cents per common share

TORONTO, March 5, 2013 /PRNewswire/ - Scotiabank reported first quarter net
income of $1,625 million compared with net income of $1,436 million in the
same period last year. Diluted earnings per share were $1.25, compared to
$1.20 in the same period a year ago. Return on equity remained strong at
16.6%. Adjusting for a real estate gain last year, income was up 21% and
diluted earnings per share grew by 11.6%.

"We are beginning the year with strong results," said Rick Waugh, Scotiabank
CEO. "The Bank's diversity across businesses and geographies continues to
contribute to solid top-line revenue growth. Once again we saw organic growth
in all four business lines along with good contributions from acquisitions,
particularly ING DIRECT in Canada and Banco Colpatria in Colombia."

"Canadian Banking had a very strong first quarter, with net income of $574
million, up 21%, driven by strong top-line revenue growth. We were pleased
with the solid contribution from ING DIRECT and the launch of our Scotiabank
American Express credit cards, and the double digit increases in net income in
our existing Canadian Banking business. This was mainly from strong asset
growth in most businesses, and low provisions for credit losses.

"With net income of $466 million, International Banking continued to perform
strongly. In addition to a good contribution from our acquisition of Banco
Colpatria, there was a strong increase in asset and deposit volumes in our
high-growth Latin American businesses. Provisions for credit losses have risen
in line with growth in our portfolios and continuing soft economic conditions
in the Caribbean.

"Global Wealth Management reported net income of $310 million. Wealth
management and insurance businesses both contributed to this growth from
strong sales, domestically and internationally, and improved market
conditions. The completion of the acquisition of Colfondos in Colombia in
December also contributed to the increase in assets under management and
assets under administrationand we look forward to the future contribution
from this business.

"Global Banking and Markets had a strong quarter with net income of $399
million. There were strong contributions across the business platform with
particularly good performance in the fixed income and precious metals
businesses as well as our corporate lending business in the U.S., Canada and
Europe.

"The Bank continues to maintain strong, high quality capital levels. The
Bank's Common Equity Tier 1 capital ratio, on an all-in basis, was 8.2%, well
above the 7% minimum. The strong level of earnings this quarter and strong
capital position allowed the Bank to increase its quarterly dividend by 3
cents to 60 cents per share.

Based on our strong start to the year, and the effective execution of our
five-point strategy, we are well-positioned to achieve our goals for 2013."

YEAR-TO-DATE PERFORMANCE versus key 2013 financial and operational objectives
was as follows:

  TARGET #1: Earn a return on equity (ROE)^(1) of 15to 18%. For the three
    months Scotiabank earned an ROE of 16.6%.
  
  TARGET #2: Generate growth in earnings per common share (diluted) of 5to
    10%^(2). Our year-over-year growth in earnings per share was 11.6%^(2).
  
  TARGET ^ #3: Maintain a productivity ratio^(1) of lessthan 56%.
    Scotiabank's ratio was 53.5% for the three months.
  
  TARGET #4: Maintain strong capital ratios. Scotiabank's capital ratios
    remain strong by both Canadian and international standards.
  
    ^(1)Refer below for a discussion of non-GAAP measures.
  ^(2)Excluding $708 million or 61cents per share relating to real estate
    gains in 2012, of which $94 million or 8 cents related to the
    firstquarter.
  

Financial Highlights

                                                           
                                        Asatandforthethreemonths ended
                                                           
            (Unaudited)              January31     October31      January31
                                           2013          2012           2012
                                                           
Operating results ($ millions)                                          
Net interest income                 2,771    2,580    2,375
Net interest income (TEB^(1))
                                    2,775     2,584    2,380
Non-interest revenue                2,411    2,284    2,246
Non-interest revenue (TEB^(1))
                                    2,481        2,354    2,309
Total revenue                       5,182         4,864    4,621
Total revenue (TEB^(1))             5,256   4,938    4,689
Provision for credit losses           310     321      265
Operating expenses                  2,813   2,713    2,507
Provision for income taxes            434     311      413
Provision for income taxes
(TEB^(1))                                   508     385      481
Net income                          1,625   1,519    1,436
Net income attributable to common
shareholders                              1,504   1,398    1,343
Operating performance                                                    
Basic earnings per share ($)               1.27    1.20     1.23
Diluted earnings per share($)             1.25     1.18     1.20
Adjusted diluted earnings per
share^(1)(2) ($)                           1.27     1.20     1.22
Return on equity^(1) (%)                  16.6    16.4     19.8
Productivity ratio (%) (TEB^(1))         53.5    54.9     53.5
Core banking margin (%)(TEB^(1))          2.30     2.35     2.25
Financial position information ($
millions)                                                                
Cash and deposits with financial
institutions^(3)                        53,120    47,337   45,400
Trading assets                          104,493    87,596   88,086
Loans^(3)                              388,610     352,487  332,968
Total assets                            736,361     668,044     637,055
Deposits^(3)                           512,561     463,590    451,609
Common equity                           36,768     35,252   28,112
Preferred shares                         4,384    4,384    4,384
Assets under administration^(1)         352,073   327,977     310,789
Assets under management^(1)            130,576       114,694        106,004
Capital measures^(4)                                                     
Common Equity Tier 1 ratio (%)              8.2           N/A          N/A
Tier 1 capital ratio (%)                   10.3          13.6          11.4
Total capital ratio (%)                    13.5         16.7          13.2
Tangible common equity to
risk-weighted assets^(1) (%)               10.1          11.3           8.5
Assets-to-capital multiple                 17.3         15.0           17.7
Risk-weighted assets ($ millions)       280,061       253,309        253,075
Credit quality                                                           
Net impaired loans ($ millions)^(5)       1,902   1,973     1,806
Allowance for credit losses ($
millions)                                3,097    2,969     2,750
Net impaired loans as a % of loans
and acceptances^(3)(5)                    0.48    0.53     0.52
Provisions for credit losses as a %
of average loans and acceptances
(annualized)^(3)                      0.32    0.36     0.32
Common share information                                                 
Share price ($)(TSX)                                                  
         High                      59.20    55.00     56.95
         Low                       52.30    51.24    47.54
         Close                     58.65   54.25    51.53
Shares outstanding (millions)                                           
         Average - Basic           1,186    1,166     1,091
         Average - Diluted         1,204    1,184     1,125
         End of period             1,192    1,184    1,103
                                                                        
Dividends per share ($)              0.57    0.57     0.52
Dividend yield^(6) (%)               4.1     4.3      4.0
Market capitalization ($
millions)(TSX)                    69,896      64,252    56,840
Book value per common share ($)     30.85    29.76    25.49
Market value to book value multiple
                                     1.9     1.8      2.0
Price to earnings multiple
(trailing 4 quarters)                     11.0    10.2     10.8
Other information                                                       
Employees                               82,618     81,497    77,302
Branches and offices                      3,392     3,123      3,116

(1)   Refer below for a discussion of non-GAAP measures.
(2)   Prior period amounts have been restated to reflect the current period
        definition. Refer below for the definition.
(3)     Prior period amounts and related ratios have been restated to reflect
        the current period presentation of deposits with financial
      institutions and cash collateral on securities borrowed and derivative
        transactions (Refer to Note 3 in the condensed interim consolidated
        financial statements).
(4)     Effective November 1, 2012, regulatory capital ratios are determined
      in accordance with Basel III rules on an all-in basis (refer to the
        MD&A). Comparative amounts for prior periods were determined in
        accordance with Basel II rules and have not been restated.
(5)   Excludes Federal Deposit Insurance Corporation (FDIC) guaranteed loans
        related to the acquisition of R-G Premier Bank of Puerto Rico.
(6)   Based on the average of the high and low common share price for the
        period.

Forward-looking statements

Our public communications often include oral or written forward-looking
statements. Statements of this type are included in this document, and may be
included in other filings with Canadian securities regulators or the United
States Securities and Exchange Commission, or in other communications. All
such statements are made pursuant to the "safe harbour" provisions of the
UnitedStates Private Securities Litigation Reform Act of 1995 and any
applicable Canadian securities legislation. Forward-looking statements may
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. Such 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. Do not unduly rely on forward-looking statements, as a number of
important factors, many of which are beyond our control, 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; significant market
volatility and interruptions; the failure of third parties to comply with
their obligations to us and our affiliates; the effect of changes in monetary
policy; legislative and regulatory developments in Canada and elsewhere,
including changes in tax laws; the effect of changes to our credit ratings;
amendments to, and interpretations of, risk-based capital guidelines and
reporting instructions and liquidity regulatory guidance; operational and
reputational risks; the risk that the Bank's risk management models may not
take into account all relevant factors; 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 financial performance, 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;
fraud by internal or external parties, including the use of new technologies
in unprecedented ways to defraud the Bank or its customers; consolidation in
the Canadian financial services sector; competition, both from new entrants
and established competitors; judicial and regulatory proceedings; acts of God,
such as earthquakes and hurricanes; 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, see the discussion starting on page 55 of
the Bank's 2012 Annual Report.

The preceding 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 preceding
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 its behalf.

The "Outlook" sections in this document are based on the Bank's views and the
actual outcome is uncertain. Readers should consider the above-noted factors
when reviewing these sections.

Additional information relating to the Bank, including the Bank's Annual
Information Form, can be located on the SEDAR website at www.sedar.com and on
the EDGAR section of the SEC's website at www.sec.gov.

Notable Business Highlights

Recent initiatives

  *Completed the acquisition of Credito Familiar in Mexico, a 243 branch
    operation focused on the Consumer and Micro Finance segment. The Bank's
    ownership of Credito Familiar represents an attractive vehicle to leverage
    into Mexico the proven CrediScotia Peru model for Consumer & Micro
    Finance.

Recognized for success

  *Scotia iTRADE was ranked #1 overall in Surviscor's Online Discount
    Brokerage scorCard for the second consecutive review. Surviscor is a
    semi-annual, impartial assessment of online features and functionality at
    Canadian online discount brokerage institutions. Scotia iTRADE moved to
    the number one position following the launch of its new and much enhanced
    trading platform, with fully integrated online brokerage-banking
    connectivity and single sign-on.

  *Scotiabank was named as the World's Best Internet Bank for Trade Services,
    2012 by Global Finance Magazine. Criteria for choosing the winners
    included strength of strategy for attracting and servicing online
    customers, breadth of products offered, success in getting clients to use
    web offerings, growth of customer base, and website design and
    functionality.

  *Mexico's President Enrique Pena Nieto awarded Scotiabank Mexico the
    "National Agroalimentary Prize" in the Services Category. This award
    represents the highest recognition in the Agricultural business in Mexico.

Serving customers

  *To help Canadians kick-start their 2013 savings, Scotiabank introduced a
    new one-year Guaranteed Investment Certificate (GIC) with a special rate
    of 1.6 per cent. GICs play a special role in a savings plan by offering
    Canadians a safe way to keep their money working.

  *Scotiabank Mexico launched "De Volada", a new unsecured personal loan
    product with market leading adjudication and fulfillment turn-around
    times, driving exceptional customer experience and loan growth.

  *To provide more choice for customers, Scotia Asset Management L.P.
    announced the launch of six new mutual funds, including four new core
    mandates to Scotia Corporate Class Funds and two new mutual fund trusts to
    ScotiaFunds. Also in the quarter Dynamic Funds launched a high yield
    credit mutual fund and Scotia Private client group launched a new real
    estate pool.

  *Scotiabank acted as Joint Lead Arranger, Joint Bookrunner & Documentation
    Agent on a USD $5 billion Senior Secured Credit Facility for Plains
    Exploration & Production Company's acquisition of certain Gulf of Mexico
    assets from BP PLC.

Scotiabank's Bright Future program in action

  *Scotiabank collaborated with Junior Achievement across the Caribbean to
    bring a financial literacy program to local secondary school students.
    Over the next three years the collaboration will provide financial
    literacy courses to more than 14,000 students.

  *Through a donation to Neptune Studio Theatre in Halifax, Scotiabank is
    providing unique support of a theatre program designed to develop
    contemporary Canadian and regional works of art.

NON-GAAP MEASURES

The Bank uses a number of financial measures to assess its performance. Some
of these measures are not calculated in accordance with International
Financial Reporting Standards (IFRS), are not defined by IFRS and do not have
standardized meanings that would ensure consistency and comparability between
companies using these measures. These non-GAAP measures are used throughout
this report and defined below.

Assets under administration (AUA)
AUA are assets administered by the Bank which are beneficially owned by
clients and therefore not reported on the Bank's statement of financial
position. Services provided for AUA are of an administrative nature, such as
trusteeship, custodial, safekeeping, income collection and distribution;
securities trade settlements, customer reporting, and other similar services.

Assets under management (AUM)
AUM are assets managed by the Bank on a discretionary basis and in respect of
which the Bank earns investment management fees. AUM are beneficially owned by
clients and are therefore not reported on the Bank's consolidated statement of
financial position. Some AUM are also administered assets and are therefore
included in assets under administration, under these circumstances.

Adjusted diluted earnings per share
The adjusted diluted earnings per share is calculated by adjusting the diluted
earnings per share to add back the non-cash, after-tax amortization of
intangible assets related to acquisitions (excluding software).

Economic equity and return on economic equity
For internal reporting purposes, the Bank attributes capital to its business
segments based on their risk profile and uses a methodology that considers
credit, market, operational and other risks inherent in each business segment.
The amount of risk capital attributed is commonly referred to as economic
equity. In the current period the economic equity methodology was updated to
include new models and assumptions. The changes have been applied
prospectively. Return on economic equity for the business segments is
calculated as a ratio of net income attributable to common shareholders of the
business segment and the economic equity attributed.

Core banking margin (TEB)
This ratio represents net interest income (on a taxable equivalent basis) on
average earning assets excluding bankers acceptances and total average assets
relating to the Global Capital markets business within Global Banking and
Markets. This is consistent with the classification of net interest from
trading operations in revenues from trading operations recorded in other
operating income.

Operating leverage (TEB)
The Bank defines operating leverage as the rate of growth in total revenue (on
a taxable equivalent basis), less the rate of growth in operating expenses.

Productivity ratio (TEB)
Management uses the productivity ratio as a measure of the Bank's efficiency.
This ratio represents operating expenses as a percentage of total revenue
(TEB).

Return on equity
Return on equity is a profitability measure that presents the net income
attributable to common shareholders as a percentage of common shareholders'
equity. The Bank calculates its return on equity using average common
shareholders' equity.

Tangible common equity to risk-weighted assets
Tangible common equity to risk-weighted assets is an alternative financial
measure for assessing the quality of capital. Tangible common equity is total
common equity plus non-controlling interests in subsidiaries, less goodwill
and unamortized intangible assets (net of taxes). Tangible common equity is
presented as a percentage of risk-weighted assets. In prior years,
risk-weighted assets were comprised of Basel II risk-weighted assets adjusted
for intangible assets deducted from tangible common equity. For 2013, the
tangible common equity ratio includes Basel III risk-weighted assets, adjusted
to include amounts recognized as regulatory deductions at 100% risk weight.

Regulatory capital ratios, such as Common Equity Tier1, Tier1 and Total
Capital ratios, have standardized meanings as defined by the Office of the
Superintendent of Financial Institutions Canada.

Taxable equivalent basis

The Bank analyzes net interest income, other operating income, and total
revenue on a taxable equivalent basis (TEB). This methodology grosses up
tax-exempt income earned on certain securities reported in either net interest
income or other operating income to an equivalent before tax basis. A
corresponding increase is made to the provision for income taxes; hence, there
is no impact on net income. Management believes that this basis for
measurement provides a uniform comparability of net interest income and other
operating revenue arising from both taxable and non-taxable sources and
facilitates a consistent basis of measurement. While other banks also use TEB,
their methodology may not be comparable to the Bank's methodology. For
purposes of segmented reporting, a segment's revenue and provision for income
taxes are grossed up by the taxable equivalent amount. The elimination of the
TEB gross up is recorded in the Other segment. The TEB gross up to net
interest income, other operating income, total revenue and provision for
income taxes are presented below:

                                                                   
                                  For the three months ended
                                                          
TEB Gross up        January31  October31  July31  April30  January31
($ millions)               2013         2012      2012       2012         2012
Net interest           $     4     $     4    $   5    $    3     $     5
income
Other operating            70         70      72       66         63
income
Total revenue and      $    74     $    74    $  77    $   69     $    68
provision for
taxes
                                                          

Group Financial Performance

Financial results

Scotiabank's net income for the first quarter was $1,625 million, compared
with $1,436 million for the same period last year and $1,519 million last
quarter.

Diluted earnings per share were $1.25, compared to $1.20 in the same period a
year ago, which included a gain on sale of a real estate asset in Western
Canada of 8 cents per share. Adjusting for this gain in 2012, diluted earnings
per share grew by 11.6%.

Diluted earnings per share increased 5.9% from $1.18 in the last quarter.

Return on equity remained strong at 16.6%, compared to 19.8% last year and
16.4% last quarter.

Impact of foreign currency translation
The table below reflects the impact of foreign currency translation on the
year-over-year and quarter-over-quarter change in key income statement items.
The impact of foreign currency translation was not significant quarter over
quarter or year over year.

                                                      
($ millions except                          For the three
per share amounts)                          months ended
                                                   
                               Jan.31,2013vs.   Jan.31,2013vs.
                                  Jan. 31, 2012      Oct. 31, 2012
U.S./Canadian dollar                                
exchange rate (average)
January31, 2013                   $    1.007        $    1.007 
October31, 2012                                   $    1.014 
January31, 2012                   $    0.979                 
% change                                  3 %             -1 %
Impact on income:                                           
Net interest income                $     (16)        $       14 
Net fee and commission revenues         (7)                6 
Other operating income                   (8)               6 
Operating expenses                         6             (12) 
Other items (net of tax)                   4              (5) 
Net income                         $     (21)        $        9 
Earnings per share (diluted)       $   (0.02)        $     0.01 
Impact by business line:                                    
Canadian Banking                   $      (2)        $        - 
International Banking                    (6)                6 
Global Wealth Management                 (3)                1 
Global Banking and Markets              (10)                3 
Other                              $       -        $      (1) 
                                                   

Q1 2013 vs Q1 2012

Net income
Scotiabank's net income was $1,625 million in the first quarter, an increase
of $189 million or 13% from the same period a year ago. Last year's results
included an after-tax real estate gain of $94million. Excluding this gain,
net income was up 21%. Acquisitions, primarily ING Bank of Canada (ING DIRECT)
and Banco Colpatria, contributed approximately 40% to the year-over-year
growth. The remaining growth was attributable to higher net interest income,
growth in wealth management and transaction-based banking revenues, increased
contributions from associated corporations and stronger trading revenues.
These increases were partly offset by higher operating expenses and provisions
for credit losses.

Total revenue
Total revenue (on a taxable equivalent basis) was $5,256 million, up $567
million or 12% from the same quarter last year, or 15% excluding the real
estate gain recorded last year. Acquisitions accounted for $355 million of
this increase. The remaining increase was attributable to higher net interest
income from asset growth, strong banking and wealth management fees, improved
trading revenues, and increased contributions from associated corporations.

Net interest income
This quarter's net interest income (on a taxable equivalent basis) of $2,775
million was $395 million or 17% higher than the same quarter last year. This
was attributable to acquisitions and asset growth primarily in business
lending, residential mortgages and personal lending. The core banking margin
was 2.30% up from 2.25% last year.

The increase in the margin was primarily from higher margins in Colombia, a
wider spread on the Canadian floating rate portfolio and lower volumes of low
spread deposits with banks. This was partially offset by the inclusion of the
lower-spread ING DIRECT portfolio.

Net fee and commission revenues
Net fee and commission revenues of $1,661 million were $161 million or 11%
higher than the same period last year. The growth was attributable to recent
acquisitions and higher wealth management revenues, from growth in assets
under management and assets under administration, and improved financial
markets. There were also increased transaction-based banking fees, in
particular payment fees.

Other operating income
Other operating income (on a taxable equivalent basis) was $820 million
compared to $809 million in the same quarter last year. Included in last
year's results was the gain on sale of a real estate asset of $111 million.
Excluding this gain, other operating income was up $122 million or 17%.
Contributions from associated corporations were higher than the prior year
primarily reflecting stronger earnings from Thanachart Bank in Thailand.
Trading revenue was up from the same period last year, mainly in the fixed
income business. Net gains on investment securities and insurance income were
also higher.

Provision for credit losses
The provision for credit losses was $310 million this quarter, up $45 million
from the same period last year. The year-over-year increase was due primarily
to higher provisions in retail and commercial lending in International
Banking, partially offset by lower provisions in Canadian Banking. Further
discussion on credit risk is provided in the MD&A.

Operating expenses and productivity
Operating expenses were $2,813 million this quarter, up $306 million or 12%
from the same quarter last year. Acquisitions accounted for $170 million of
the increase. The remaining growth was primarily in compensation-related
expenses. The increase reflected higher staffing levels and annual merit
increases, growth in performance-based compensation in line with higher income
levels, and increased pension and benefit expenses. The latter increase was
primarily due to the impact of the continued low interest rate environment.
There were also higher premises costs, primarily from rental expenses due to
the sale of Scotia Plaza in the prior year.

The productivity ratio of 53.5% remained unchanged from the same quarter last
year. Operating leverage year over year was positive 2.7%, adjusting for the
real estate gain last year.

Taxes
The effective tax rate for this quarter was 21.1%, down from 22.3% in the
first quarter last year. This quarter the tax rate benefitted from foreign tax
recoveries, higher income in low tax jurisdictions and lower non-deductible
expenses. Last year's tax rate was favourably impacted by lower taxes on the
gain on sale of the real estate asset.

Q1 2013 vs Q4 2012

Net income
Net income was $1,625 million, up $106 million or 7% from the fourth quarter.
The increase was due primarily to contributions from ING DIRECT, higher net
interest income from asset growth, stronger wealth management and trading
revenues and increased income from associated corporations. These items were
partly offset by an increase in operating expenses and the impact of a higher
effective income tax rate.

Total revenue
Total revenue (on a taxable equivalent basis) of $5,256 million was $318
million or 6% higher quarter over quarter. Recent acquisitions accounted for
$125 million of the growth. The remaining increase was primarily from higher
net interest income, as well as strong contributions from associated
corporations. There were also higher wealth management revenues. Trading
results were stronger quarter over quarter, while underwriting revenues
declined.

Net interest income
Net interest income (on a taxable equivalent basis) was $2,775 million, up
$191 million or 7% from the previous quarter. This was attributable to
acquisitions and asset growth, primarily in business lending and residential
mortgages. The core banking margin of 2.30% was down from 2.35% last quarter.

The decline in core banking margin was due entirely to the impact of ING
DIRECT, which has lower spread assets. Adjusting for this, the margin was in
line with last quarter.

Net fee and commission revenues
Compared to the previous quarter, net fee and commission revenue of $1,661
million was up $27 million or 2%. The increase was due mainly to stronger
mutual fund and retail brokerage revenues, from growth in assets under
management and assets under administration and improved financial markets.
These increases were partly offset by reduced underwriting fees and modest
decline in transaction-based revenues.

Other operating income
Other operating income (on a taxable equivalent basis) rose $100 million or
14% to $820 million. Trading revenues were up quarter over quarter, mainly in
the fixed income and precious metals business. Net income from associated
corporations was also stronger this quarter, primarily from a higher
contribution from Thanachart Bank.

Provision for credit losses
The provision for credit losses was $310 million this quarter, down $11
million from the prior quarter. This decline was due primarily to lower
provisions in commercial lending in Canadian Banking and Global Banking and
Markets, partially offset by higher provisions in International Banking.
Further discussion on credit risk is provided in the MD&A.

Operating expenses and productivity
Compared to the fourth quarter, operating expenses were up $100 million or 4%,
of which $60 million related to acquisitions. The remaining increase of 1% was
due primarily to growth in compensation-related expenses as a result of annual
merit increases and higher stock-based compensation. The latter was mainly
from the seasonal impact of vesting of new grants awarded to employees
eligible to retire. Pension and other benefit costs were also up, mostly
reflecting the impact of the continued low interest rate environment. In
addition, benefit costs were lower last quarter due to actuarial revaluations
of long-term benefit plans. These increases were partly offset by lower
expenses in almost all of the other expense categories, due mainly to
seasonally higher expenses in the prior quarter.

The productivity ratio was 53.5%, compared to 54.9% in the previous quarter.

Taxes
This quarter, the effective tax rate increased to 21.1% from 17.0% in the
prior quarter. The increase was primarily from lower foreign tax recoveries
and proportionately lower tax-exempt income. As well, last quarter's tax rate
benefitted from an increase in deferred tax assets due to changes in tax rates
in foreign subsidiaries.

Financial position

The Bank's total assets at January 31, 2013 were $736 billion, up $68 billion
or 10% from October 31, 2012, including approximately $41 billion upon the
acquisition of ING DIRECT. The impact of foreign currency translation was not
significant.

Cash and deposits with financial institutions grew by $6 billion, due mainly
to increases in interest bearing deposits with central banks.

Precious metals decreased $1 billion due to lower prices and inventory.

Securities purchased under resale agreements and securities borrowed increased
by $7 billion.

Trading assets increased $17 billion from October 31, 2012, almost entirely in
trading securities from higher holdings of common equities, and U.S. and other
foreign government debt.

Investment securities grew by $5 billion due mainly to increased holdings of
Canadian government debt from the acquisition of ING DIRECT. As at January 31,
2013, the unrealized gain on available-for-sale securities, after the impact
of qualifying hedges is taken into account, was $1,023 million, an increase of
$132 million from October 31, 2012. The change was due primarily to increases
in the values of common equities.

Loans increased $36 billion or 10% from October 31, 2012. Business and
government loans rose $4 billion due primarily to growth in Latin America and
Asia, as well as in Canada due mainly to the acquisition of ING DIRECT. In
retail lending, residential mortgages increased $31 billion almost entirely
from the acquisition of ING DIRECT. Personal and credit card loans rose $2
billion due mainly to growth in Latin America.

Total liabilities were $693 billion as at January 31, 2013, up $67 billion or
11% from October 31, 2012, including approximately $38 billion upon the
acquisition of ING DIRECT.

Total deposits increased by $49 billion. Personal deposits grew by $30 billion
primarily from the acquisition of ING DIRECT. Business and government deposits
increased $16 billion from both the ING DIRECT acquisition as well as growth
in the U.S. Deposits by banks increased $2 billion in the U.S. and Asia.

Obligations related to securities sold under repurchase agreements and
securities lent as well as obligations related to securities sold short grew
by $15 billion and $6 billion, respectively. Derivative instrument liabilities
decreased $3 billion, which was similar to the decrease in derivative
instrument assets.

Total equity increased $1,585 million from October 31, 2012. This increase was
driven by internal capital generation of $829 million, the issuance of common
shares of $413 million, comprised of $99 million for the purchase of Colfondos
in Colombia and $314 million through the Dividend Reinvestment Plan and the
exercise of options. Other reserves were up $31 million.

Accumulated other comprehensive income increased $243 million due mainly to
higher unrealized gains on available-for-sale securities and reduced
unrealized foreign exchange losses on the Bank's investments in its foreign
operations.

Non-controlling interests in subsidiaries increased $107 million due mainly to
current period net income attributable to non-controlling interests and the
acquisition of Colfondos. Non-controlling interests - capital instrument
equity holders decreased $38 million due mainly to distributions.

Capital ratios

The Bank's various regulatory capital amounts consist of the following:

                                                        
                                         As at
                                                   
                             January31   October31 
                                       2013           2012
                                         
                                BaselIII              
        ($ millions)                 All-in       Basel II
                                                   
Common Equity Tier1 capital  $   23,014   $        n/a 
Tier 1 capital                   28,960        34,436 
Total regulatory capital      $   37,818   $     42,193 
Total risk-weighted assets    $  280,061   $    253,309 
Capital ratios:                                     
Common Equity Tier1 capital      8.2%           n/a 
Tier 1 capital ratio             10.3%         13.6% 
Total capital ratio              13.5%         16.7% 
Assets-to-capital multiple        17.3x         15.0x 
                             

The Bank continues to maintain a strong capital position. The CET1, Tier 1 and
Total Capital ratios under Basel III all-in were 8.2%, 10.3% and 13.5%
respectively, well above minimum requirements. As at October 31, 2012, the
Basel II Tier 1 and Total Capital ratios were 13.6% and 16.7% respectively.

The Basel III all-in Tier 1 and Total ratios are lower than Basel II ratios
due to the introduction of additional regulatory deductions including
intangibles below Basel II threshold, deferred tax assets that rely on future
profitability, and defined-benefit pension fund net assets.

The increase in risk-weighted assets of $27 billion was due to the
implementation of the Basel III requirements ($12 billion), the acquisition of
ING DIRECT ($5 billion) and organic growth ($10 billion).

Business Segment Review

Scotiabank's results, average assets, and average liabilities, allocated by
these operating segments are as follows:

                                                                                      
                                 For the three months ended January31, 2013
Taxable                                                         Global
equivalent                                                     Banking
basis^(1) ($        Canadian   International   GlobalWealth       and
millions)           Banking        Banking     Management  Markets  Other^(2)     Total
Net interest                                                   $  217   $  (129)  $  2,771
income              $ 1,361     $    1,200      $     122
Net fee and                                                      305     (45)    1,661
commission
revenues               384          334           683
Net income from                                                    -      (47)      150
investments in
associated
corporations            9           132            56
Other operating                                                  427     (22)      600
income                  1           90           104
Provision for                                                      5         -      310
credit losses          118           186             1
Other operating                                                  406         -   2,813
expenses               861           976           570
Provision for                                                    139     (119)      434
income taxes           202           128            84
Net income          $   574     $      466      $     310   $  399   $ (124)  $  1,625
Net income                                                                    
attributable to
non-controlling
interests                                          
 Non-controlling                                          9       -         -       59
  interests in
  subsidiaries           -            50      
 Capital                                                  -       -         7        7
  instrument
  equity holders         -             -      
Net income                                                     $  399   $  (131)  $  1,559
attributable to
equity holders of
the Bank            $   574     $      416      $     301
Average assets                                                 $  240   $     93  $    729
($billions)        $   267     $      115      $      14
Average                                                        $  175   $    234  $    687
liabilities
($billions)        $   185     $       76      $      17

(1)   Refer above for a discussion of non-GAAP measures.
(2)     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 other operating income and
      provision for income taxes for the three months ended January31, 2013
        ($74) to arrive at the amounts reported in the Consolidated Statement
        of Income, differences in the actual amount of costs incurred and
        charged to the operating segments.
     

                                                                                      
                                 For the three months ended October31, 2012
Taxable                                                        Global
equivalent                                                    Banking
basis^(1) ($      Canadian   International   GlobalWealth        and
millions)          Banking        Banking     Management   Markets  Other^(2)      Total
Net interest      $ 1,229     $   1,153     $     125   $  217    $ (144)   $ 2,580
income
Net fee and          376          352         646    338      (78)    1,634
commission
revenues
Net income from       (2)          103           53      1      (37)      118
investments in
associated
corporations
Other operating      (2)          84          99     361      (10)     532
income
Provision for       132          176            2      11      -      321
credit losses
Other operating      820          979          538    390     (14)    2,713
expenses
Provision for        168           84           83     120     (144)      311
income taxes
Net income        $   481     $     453     $     300  $  396   $ (111)  $ 1,519
Net income                                                                  
attributable to
non-controlling
interests
 Non-controlling       -           52            6       1        -       59
  interests in
  subsidiaries
 Capital               -             -             -       -        7        7
  instrument
  equity holders
Net income        $   481     $     401     $     294   $  395    $ (118)   $ 1,453
attributable to
equity holders of
the Bank
Average assets ($ $   232     $     111     $      14   $  232    $  89   $   678
billions)
Average           $   153     $      73     $      16   $  174    $  222   $   638
liabilities

(1)   Refer above for a discussion of non-GAAP measures.
(2)     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 other operating income
       and provision for income taxes for the three months ended October31,
         2012 ($74), to arrive at the amounts reported in the Consolidated
         Statement of Income, differences in the actual amount of costs
         incurred and charged to the operating segments. 
      

                 
                                For the three months ended January31, 2012
Taxable                                                       Global
equivalent                                                   Banking
basis^(1) ($      Canadian   International   GlobalWealth       and
millions)          Banking        Banking     Management  Markets  Other^(2)     Total
Net interest      $ 1,174     $   1,003      $    123  $  170   $   (95)  $ 2,375
income
Net fee and          365          291          586   289     (31)   1,500
commission
revenues
Net income from        1           68           53      -      (29)      93
investments in
associated
corporations
Other operating        9           89           97    386       72     653
income
Provision for        136          124            -      5        -     265
credit losses
Other operating      768          845          495    390        9   2,507
expenses
Provision for        170          91           76    139      (63)     413
income taxes
Net income        $   475     $     391      $    288  $  311   $   (29)  $ 1,436
Net income                                                               
attributable to
non-controlling
interests
 Non-controlling      1           18            6      -        -      25
  interests in
  subsidiaries
 Capital              -            -            -      -       13      13
  instrument
  equity holders
Net income        $   474     $     373      $    282  $  311   $   (42)  $ 1,398
attributable to
equity holders of
the Bank
Average assets ($ $   219     $     101      $     13  $  206   $    97  $  636
billions)
Average           $   147     $      63      $     15  $  159   $   219  $   603
liabilities

(1)    Refer above for a discussion of non-GAAP measures.
(2)     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 other operating income
       and provision for income taxes for the three months ended January31,
         2012 ($68) to arrive at the amounts reported in the Consolidated
         Statement of Income, differences in the actual amount of costs
         incurred and charged to the operating segments. 
      

Canadian Banking

Q1 2013 v Q1 2012
Canadian Banking reported net income attributable to equity holders of $574
million in the first quarter. The increase of $100 million or 21% from the
same period last year was driven by the acquisition of ING DIRECT, strong
organic asset growth and a lower provision for credit losses. Return on
economic equity decreased to 36.3% from 38.8% last year, mainly reflecting the
inclusion of ING DIRECT.

Q1 2013 v Q4 2012
Quarter over quarter, net income attributable to equity holders increased $93
million or 19%, of which $45 million was from the ING DIRECT acquisition.
Organic growth of 10% reflected higher net interest income driven by strong
asset growth and lower provision for credit losses. Return on economic equity
decreased to 36.3% from 37.7% last quarter.

International Banking

Q1 2013 v Q1 2012
International Banking reported a strong first quarter with net income
attributable to equity holders of $416 million, an increase of $43 million or
12% over last year. The increase was driven by strong loan growth in Latin
America, the acquisition of Banco Colpatria in Colombia, and higher income
from investments in associated corporations, partly offset by increased
provisions for credit losses. Return on economic equity was 13.9% versus 12.7%
in the same quarter last year.

Q1 2013 v Q4 2012
Net income attributable to equity holders increased by $15 million or 4% to
$416 million. This was driven by solid asset growth, particularly in Latin
America and higher net income from investments in associated corporations.
Partly offsetting were seasonally higher retail fees in Chile in the previous
quarter. Return on economic equity was 13.9% versus 12.4% last quarter.

Global Wealth Management

Q1 2013 v Q1 2012
Global Wealth Management reported net income attributable to equity holders of
$301 million this quarter, an increase of $19 million or 7% from the same
quarter last year. Net income increased due to strong results from both the
wealth management and insurance businesses. Growth in wealth management was
driven by higher assets under management (AUM) and assets under administration
(AUA) from net sales and improved financial markets. There were also higher
revenues from global insurance. Return on economic equity was 17.0% compared
to 14.0% last year.

Q1 2013 v Q4 2012
Quarter over quarter, net income attributable to equity holders increased by
$7 million or 2% due mostly to growth in brokerage and mutual fund fees, and
higher international wealth and insurance revenues, partially offset by
increased expenses.

Global Banking and Markets

Q1 2013 v Q1 2012
Global Banking and Markets continued its very strong performance, reporting
net income attributable to equity holders of $399 million in the first
quarter, the second highest quarterly result on record. The year-over-year
increase of $88 million or 28%, was due to stronger revenues across the
business platform. Return on economic equity was 30.8% this quarter compared
to 23.2% in the same period last year.

Q1 2013 v Q4 2012
Net income attributable to equity holders increased $4 million or 1% compared
to the prior quarter, continuing the strong trend of the last few quarters.
Higher revenues in most businesses and lower provisions for credit losses were
partly offset by modestly higher expenses. Return on economic equity increased
slightly to 30.8% from 30.1%.

Other

The Other segment includes Group Treasury, smaller operating segments and
other corporate items which are not allocated to a business line.

Net interest income, other operating income, and the provision for income
taxes in each period include the elimination of tax-exempt income gross-up.
This amount is included in the operating segments, which are reported on a
taxable equivalent basis. The elimination was $74 million in the first
quarter, compared to $68 million in the same period last year and $74 million
last quarter.

Net income from investments in associated corporations and the provision for
income taxes in each period include the tax normalization adjustments related
to the gross-up of income from associated companies. This adjustment
normalizes the effective tax rate in the divisions to better present the
contribution of the associated companies to the divisional results.

Q1 2013 v Q1 2012
The Other segment had a net loss attributable to equity holders of $131
million in the first quarter, compared to a net loss of $42 million last
year. Adjusting for last year's after-tax gain of $94 million from the sale
of a real estate asset, the net loss last year was $136 million. Higher net
gains on investment securities were mostly offset by lower revenues from
asset/liability management activities.

Q1 2013 v Q4 2012

The Other segment had a net loss attributable to equity holders of $131
million in the first quarter, compared to a net loss of $118 million in the
prior quarter. The quarter-over-quarter increase in the net loss was mainly
from higher taxes and lower net gains on investment securities. Partly
offsetting was a lower intercompany elimination related to the underwriting of
the Bank's common share issuance in the comparative quarter. The latter had
no impact on the Bank's consolidated results.

Shareholder Information

Direct deposit service
Shareholders may have dividends deposited directly into accounts held at
financial institutions which 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 2013
Record and payment dates for common and preferred shares, subject to approval
by the Board of Directors.

                
Record Date      Payment Date
January 2        January 29
April 2          April 26
July 2           July 29
October 1        October 29
                
                

Annual Meeting date for fiscal 2013
The Annual Meeting for the fiscal year 2013 is scheduled for April8, 2014, in
Kelowna, British Columbia, Canada.

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.

Website
For information relating to Scotiabank and its services, visit us at our
website: www.scotiabank.com.

Conference call and Web broadcast
The quarterly results conference call will take place on March5, 2013, at
2:00pm 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(416)644-3414 or 1-800-814-4859 (please call five to 15 minutes
in advance). In addition, an audio webcast, with accompanying slide
presentation, may be accessed via the Investor Relations page of
www.scotiabank.com. Following discussion of the results by Scotiabank
executives, there will be a question and answer session.

A telephone replay of the conference call will be available from March6,
2013, to March20, 2013, by calling (416)640-1917 or 1-877-289-8525 and
entering the identification code 4584490#. The archived audio webcast will be
available on the Bank's website for three months.

------------------------------------------------------------------------------

Contact information

Investors:

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)775-0798
Fax: (416)866-7867
E-mail: investor.relations@scotiabank.com

Media:
For other information and for media enquiries, please contact the Public,
Corporate and Government Affairs Department at the above address.

Telephone: (416)933-1344
Fax: (416)866-4988
E-mail: corpaff@scotiabank.com

Shareholders:
For enquiries related to changes in share registration or address, dividend
information, lost share certificates, estate transfers, or to advise of
duplicate mailings, please contact the Bank's transfer agent:

Computershare Trust Company of Canada
100 University Avenue, 9th Floor
Toronto, Ontario, Canada M5J 2Y1
Telephone: 1-877-982-8767
Fax: 1-888-453-0330
E-mail: service@computershare.com

Co-Transfer Agent (U.S.A.)
Computershare Trust Company N.A.
250 Royall Street
Canton, MA 02021 U.S.A.
Telephone: 1-800-962-4284

For other shareholder enquiries, please contact the Finance Department:
Scotiabank
Scotia Plaza, 44 King Street West
Toronto, Ontario, Canada M5H 1H1
Telephone: (416)866-4790
Fax: (416)866-4048
E-mail: corporate.secretary@scotiabank.com

Rapport trimestriel disponible en français
Le Rapport annuel et les états financiers de la Banque sont publiés en
français et en anglais et distribués aux actionnaires dans la version de leur
choix. Si vous préférez que la documentation vous concernant vous soit
adressée en français, veuillez en informer Relations publiques, Affaires de la
société et Affaires gouvernementales, La Banque de Nouvelle-Écosse, Scotia
Plaza, 44, rue King Ouest, Toronto (Ontario), Canada M5H 1H1, en joignant, si
possible, l'étiquette d'adresse, afin que nous puissions prendre note du
changement.

The Bank of Nova Scotia is incorporated in Canada with limited liability.





SOURCE Scotiabank

Contact:

Peter Slan, Senior Vice President, Investor Relations, (416) 933-1273; Ann
DeRabbie, Director, Media Communications, (416) 933-1344