Investor Presentation:
Canadian Capital Structuring
Brian Porter, Executive Managing Director
Head of Canadian Capital Structuring
Today’s Agenda
• Overview of Canadian Capital Structuring
• 2003 results
• Outlook and strategy
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Where Canadian Capital Structuring Fits
Scotia Capital
• Organized for performance
Canadian Capital
Structuring
Global Trading
Capital Markets Group
• Global Derivatives
• Domestic Fixed Income
• Domestic Money
Market
• U.S. Fixed Income
Global Foreign Exchange
U.S.
Corporate
Investment Banking / M&A
Corporate Banking
Loan Syndication
Institutional Equity
Equity Capital Markets
Equity Research
Global Precious Metals
(ScotiaMocatta)
Europe
Corporate
Corporate Banking
• 9 Industry Groups
Corporate Banking
• 5 Industry Groups
Loan Syndication
Loan Syndication
Specialized Lending
Products
• Securitization
• Leasing
• Municipal Finance
Securitization
Private Equity
Sponsor Group
Private Equity
Sponsor Group
International Money
Market and Bank Funding
Citadel Hill Fund
Management
Canadian Relationship Management
8 Industry Groups in Canada
270 Clients
23 Relationship Managers
Infrastructure
Loan Portfolio
Management
Compliance
Finance
Human Resources
Corporate Services
& Marketing
Business Planning
& Client MIS
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Key Businesses and Leaders
Canadian Capital
Structuring
Investment Banking /
M&A
Institutional Equity
Equity Capital Markets
Equity Research
Corporate Banking
Loan Syndication
• Phillip Smith, Managing Director,
Head of Investment Banking
• James O’Sullivan, Managing
Director, Head of M&A
• Jim Mountain, Managing Director,
Head of Institutional Equity
• Bob Williams, Managing Director,
Head of Equity Capital Markets
• James McLeod, Managing
Director, Head of Equity Research
• Bob Finlay, Managing Director,
Head of Corporate Banking
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Industry Specialization Model
Infrastructure,
Privatization & Power
Industrial Products
Financial Services
Forest Products
+
Real Estate
Mining
Consumer Products
Oil & Gas
and Pipelines
Communications,
Media & Technology
• Approximately 1,000 clients – 8 industry groups
• Approximately 300 professionals – in 5 offices
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FY2003 League Table Highlights
Lending
Agent/Co-agent in Canada
for FY2003 (LPC)
Equity Underwriting In Canada for FY2003
(Bloomberg)
#1
#2
Equity Research
All Star Analysts
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M&A
In Canada for FY2003
#2
(Brendan Wood)
(Bloomberg)
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Today’s Agenda
• Overview of Canadian Capital Structuring
• 2003 results
• Outlook and strategy
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Revenues Up in 2003
Revenue (C$MM)
Investment Banking/M&A
Institutional Equity
Corporate Banking
$796
$93
$173
$530
2000
$792
$106
$213
$473
2001
$700
$720
$120
$124
$208
$262
$373
$334
2002
2003
• Changes in revenue mix
have favored higher
ROEE businesses
• Revenues expected to be
slightly higher in 2004
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Adequately Provisioned for Loan Losses
Loan Losses (C$MM)
$124
• Loan loss provisions
expected significantly
lower in 2004 from 2003
$33
2000
$38
$37
2001
2002
2003
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ROEE – Consistently Strong
ROEE
23.4%
21.9%
19.2%
20.0%
• Consistent contributor
to Scotia Capital. A 2025% ROEE business
• Diversity of businesses
fosters stable ROEE
• ROEE expected to
increase in 2004
2000
2001
2002
2003
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Today’s Agenda
• Overview of Canadian Capital Structuring
• 2003 results
• Outlook and strategy
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Overall Strategy For CCS
ü Focus on disciplined lending – core product
ü Improve credit quality – execution is key
ü Maximize ROEE through aggressive cross-selling
ü Build on momentum
ü Pursue market share gains in relatively mature market
ü Maintain traditional cost control culture and our
industry leading productivity ratio
ü Execution is a core competency not a commodity
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Canadian Corporate Banking
Market Position
ü Lending is mature but remains profitable and core
ü Competitors continue to exit relationships
ü We are committed to disciplined lending
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Canadian Corporate Banking – Top Tier
Syndications League Table (Fiscal 2003)
• Scotia Capital is the #1 underwriting bank
Rank
Lender
Amount
(C$BN)
Deal
Count
1
Scotia Capital
44.8
55
2
CIBC World Markets
43.6
56
3
RBC Capital Markets
38.0
42
4
Citigroup
31.0
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5
Toronto Dominion Bank
26.4
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Top 5 lenders with Agent/Co-Agent roles for Canadian borrowers, by full credit amount in F2003.
Source: Loan Pricing Corporation
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Lending Strategy Differentiates Us
• Lending is our core business – it underpins
everything we do
• Focus on disciplined lending – improve credit quality
• Continue to closely manage risk through the roll out
of new credit processes
• Capitalize on relationships & our strong structuring
and underwriting capabilities – increase
refinancing/acquisition pitches
• Cross-sell and up-tier relationships
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Investment Banking
Market Position
Greenwich Survey (2003)
ü Ranked #2 as “Lead Investment Bank”, up from
#3 in 2002
Equity Underwriting
ü #1 in IPO’s, Preferred Shares, and
Convertible Debentures*
ü #2 in Income Trusts and Common Equity*
*Scotia Capital, National Post & Bloomberg data
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Investment Banking
Equity Underwriting Market Share*
2000-2003 (Underwriting Liability)
14.2%
16.0%
11.3%
8.0%
2000
2001
2002
2003
*Bloomberg
• Market share has doubled over the past 3 years
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Investment Banking
Strategy
• Equity Underwriting market share has doubled over
the past 3 years as a result of:
– Focusing on our competitive advantage including our
established presence in lending, equity sales and trading in
order to facilitate cross sell
– Aligning Investment Banking and Canadian Relationship
Management by industry group
– Focusing on Common Equity to supplement traditional
success in income -oriented products
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Mergers & Acquisitions
League Tables
• Ranked #2 (by transaction value) among Canadian
dealers (Bloomberg)
Strong Momentum
• Involved in three of the year’s Top 10 deals,
including the two largest transactions
(Manulife/John Hancock, EnCana)
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Mergers & Acquisitions
Strategy
ü Fully realize the opportunity in existing footprint of
lead relationships
ü Sharpen focus on M&A across all 8 industry groups
ü Lever willingness to opportunistically lead with the
balance sheet
ü Lead with ideas -
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Institutional Equity (Sales & Trading)
Market Position
ü Top tier performer
ü Record profitability in 2003 and a
consistent producer
ü High ROEE business
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Institutional Equity (Sales & Trading)
Strategy
ü Potential for increased revenues and enhanced ROEE
from new products and markets such as U.S.
domiciled accounts, hedge funds and Equity Finance
(prime brokerage)
ü Niche expansion opportunities
ü Continue to focus on high quality execution:
– Review quality of service through face-to-face
client meetings
– Continuous monitoring of trade execution
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Institutional Equity (Equity Research)
Market Position
ü 13 “All-Star” Equity Research Analysts
ü Separated from Investment Banking for
governance purposes
Strategy
ü Provide differentiated, quality research that
adds value
ü Tailor research content and service to specific
client needs
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Summary – Goals
ü To become the most profitable firm for all the products
we deliver in Canada
ü Focus on profitability by maximizing revenue through
profitable market share gains, aggressive cross-selling
and strong cost control
ü Exploit competitive advantage to maximize cross-selling
and ROEE
ü Maintain momentum to attract and retain strong
performers
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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 our
objectives, strategies, expected financial results (including those in the area of risk management), and our outlook for
our businesses and for the Canadian, U.S. and global economies. 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 andglobally, fluctuations in interest rates and currency
values, liquidity, regulatory developments in Canada and elsewhere, technological developments, consolidation in the
Canadian financial services sector, competition, judicial and re gulatory proceedings, the possible impact of
international conflicts and other developments including terrorist acts and the war on terrorism, 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, financial condition or liquidity.
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, 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.
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