TENNYEAR STATISTICAL REVIEW 2 MANAGEMENT’S … · THE EXECUTIVE MANAGEMENT TEAM 16 MANAGEMENT’S...

TEN-YEAR STATISTICAL REVIEW 2

SHAREHOLDERS’ REPORT 4

CORPORATE GOVERNANCE 6

BOARD OF DIRECTORS 11

THE EXECUTIVE MANAGEMENT TEAM 16

MANAGEMENT’S DISCUSSION & ANALYSIS 19

OVERVIEW OF BUSINESS LINES

• Retail Banking 26

• Corporate & Commercial Banking 29

• Treasury 31

• Scotia Jamaica Building Society 32

• Scotia Investments Jamaica Limited 33

• Scotia Jamaica Life Insurance Company Limited 35

• Scotia Private Client Group 36

RISK MANAGEMENT 37

OUR PEOPLE 41

OUR COMMUNITY 42

OUR 2011 AWARDS 44

AUDITED FINANCIAL STATEMENTSSCOTIA GROUP JAMAICA LIMITED 45

ECONOMIC REVIEW 150

SHAREHOLDINGS 152

BRANCHES AND TEAM LEADERS 153

SUBSIDIARIES, BOARD MEMBERS AND SENIOR OFFICERS 158

CORPORATE DATA 159

MANAGEMENT OFFICERS 160

GLOSSARY 162

Table of Contents

4 SHAREHOLDERS’ REPORT

19 MANAGEMENT’S DISCUSSION &ANALYSIS

44 OUR 2011AWARDS

11 BOARD OF DIRECTORS

2 Scotia Group Jamaica Limited Annual Report 2011

BALANCE SHEET DATATOTAL ASSETS 332,041,259 325,823,953 315,555,872PERFORMING LOANS 94,719,222 91,599,243 88,591,281NON-PERFORMING LOANS 5,257,217 4,215,254 3,587,030INVESTMENTS & OTHER EARNING ASSETS 200,552,567 200,375,040 194,182,553DEPOSITS BY THE PUBLIC 144,670,083 145,664,085 141,877,096SECURITIES SOLD UNDER REPURCHASE AGREEMENT 44,700,992 45,025,585 46,120,207STOCKHOLDERS' EQUITY 60,310,619 53,155,381 45,724,655

PROFITS AND DIVIDENDSPROFIT BEFORE TAX 14,244,620 14,417,094 15,379,659NET PROFIT AFTER TAX ATTRIBUTABLE TO STOCKHOLDERS 10,193,390 10,405,649 11,152,199 9,39DIVIDENDS PAID AND PROPOSED 4,605,128 4,605,128 4,325,086NUMBER OF STOCK UNITS AT YEAR END (1) 3,111,573 3,111,573 3,111,573

FINANCIAL RATIOSEARNINGS PER STOCK UNIT (1) 3.28 3.34 3.58 3.02 2.48 2.32 2.01 2.00 1.86 1.32PRICE EARNINGS RATIO 7.59 6.09 5.13 6.68 8.56 9.51 10.51 12.62 4.80 5.92DIVIDENDS PER STOCK UNIT (Dividends paid and proposed) (1) 1.48 1.48 1.39 1.30 1.19 1.07 1.00 0.925 0.875 0.58DIVIDEND YIELD (1) 6.48% 7.08% 8.13%DIVIDEND PAYOUT RATIO 45.18% 44.26% 38.78%RETURN ON AVERAGE EQUITY 17.59% 20.78% 26.35%RETURN ON ASSETS AT YEAR END 3.07% 3.19% 3.53%

OTHER DATA

STOCK PRICE AT THE YEAR END (1) 24.90 20.35 18.38PRICE CHANGE FROM LAST YEAR 22.36% 10.72% -9.08%CHANGE IN JSE INDEX FROM LAST YEAR 14.30% 3.46% -14.06% -5.85NUMBER OF STAFF 2,337 2,283 2,273EXCHANGE RATE J$1=US$ 0.0116 0.0117 0.0112INFLATION RATE YEAR OVER YEAR 7.26% 10.37% 7.18%

2011 2010 2009

(1) Amounts have been retroactively adjusted to reflect the one-for-one bonus issue on March 10, 2005 .

Ten Year Statistical Review - Scotia Group Jamaica Ltd.

Sowing the Seeds for a Brighter Tomorrow 3

280,284,251 263,125,631 199,840,115 183,460,578 168,167,649 147,653,177 127,367,433

P 86,726,366 74,557,390 58,578,711 57,324,645 52,420,106 47,111,019 38,513,658N 2,970,714 2,109,177 1,009,003 918,164 1,039,396 963,695 906,857I 167,116,031 162,688,005 120,465,837 107,526,232 90,600,604 78,502,267 66,447,596D 130,673,257 131,017,687 113,279,538 107,546,636 98,810,819 87,067,332 76,947,608S 40,206,572 31,530,287 18,234,105 17,319,240 18,546,429 15,292,996 11,566,632

37,940,932 34,373,330 27,389,555 23,524,953 20,605,017 17,651,197 14,065,776

P 13,119,095 10,167,221 9,315,624 8,329,812 8,172,633 7,307,403 5,308,735

N 9,390,739 7,492,854 6,798,908 5,885,586 5,856,057 5,456,670 3,869,782D 4,045,044 3,649,313 3,132,138 2,927,232 2,707,689 2,561,328 1,683,158N 3,111,573 3,111,573 2,927,232 2,927,232 2,927,232 2,927,232 2,927,232

F 3.02 2.48 2.32 2.01 2.00 1.86 1.32

P 6.68 8.56 9.51 10.51 12.62 4.80 5.92D 1.30 1.19 1.07 1.00 0.925 0.875 0.58D YIELD ( 5.58% 5.08% 5.15% 3.88% 4.41% 9.78% 7.34%D 43.07% 47.26% 46.07% 49.74% 46.24% 46.94% 43.49%

25.28% 24.01% 26.35% 26.33% 29.85% 34.22% 29.16% 3.35% 2.85% 3.40% 3.21% 3.48% 3.70% 3.04%

O

20.22 21.25 22.06 21.14 25.26 8.95 7.83P -4.85% -3.67% 4.35% -16.31% 182.18% 14.30% 2.49%C -5.85% 15.85% -16.10% -1.50% 72.46% 46.93% 25.92%

2,235 2,190 1,895 1,843 1,864 1,851 1,805E 0.0131 0.0141 0.0151 0.0156 0.0162 0.0166 0.0203

25.34% 9.01% 6.49% 19.02% 12.27% 14.13% 5.04%

2008 2007 2006 2005 20022004 2003


Bruce BowenPresident & CEO Scotiabank Group

During our 2011 financial year, Scotia Group Jamaica Ltd(Scotiabank Group) executed on its strategic objective of meetingthe financial needs of our customers while driving growth and valuefor our shareholders, despite a continued challenging economicenvironment. Over the course of the financial year, economicgrowth remained weak, with GDP declining by 0.9% in the lastquarter of 2010, and estimated to grow only 1.5% for 2011.Predictably, during the first three quarters of our fiscal year, thebanking sector saw marginal loan growth of 1.4%, while creditfundamentals worsened as non-performing loans for the industryincreased from 5.2% of total loans in September 2010, to 7.9% forthe industry in June 2011. Benchmark interest rates continued to

decline during the year, and are now at record 30-year lows,resulting in a continued squeeze on margins. Despite this,Scotiabank Group met or exceeded all of our key targets in 2011,and reported net income of $10.6 billion, with each of our businesslines performing well and contributing to our earnings.

Our performance is the result of staying focused on our strategy ofgrowing market share in our core business lines, diversifying ourrevenue streams, prudent risk management, and efficiencyimprovements to contain expense growth. We continue to leadthe market in retail and public sector lending, our unit trust businesswithin Scotia Investments Jamaica Limited (Scotia Investments)

Shareholders’ Report - Scotia Group Jamaica Ltd.

Brian PorterChairmanScotiabank Group

enjoys a commanding share of the market, and Scotia Jamaica LifeInsurance Company Limited (Scotia Insurance) continues todominate the bancassurance sector.

In continuing to build a sustainable revenue growth platform, wefocused on adding new business and product lines, introducedattractive programmes and offers in existing product lines,expanded our non-branch sales capacity and worked to improvecustomer experience in our branches and subsidiaries.

Some of the more noteworthy initiatives include the launch of ournew Capital Markets Unit in Scotia Investments, which offersalternative financing options to our corporate clients. ScotiaInsurance is now an official distributor of the renowned internationalHeritage Education Plan product. We also launched a micro-financesubsidiary, Scotia Jamaica Microfinance Company Limited(CrediScotia), as we aim to serve all segments of the Jamaicanmarket and make financing accessible to a wider audience.

During the year, we enhanced some of our existing product lines tobenefit both our commercial and retail customers. Our businesscustomers benefitted from the upgrade of our Point of Sale terminalofferings to include wireless and Internet Protocol (IP) capabledevices and the launch of a new business internet-banking platformwhich offers critical new functionalities and service enhancements.

Our retail customers benefited from the launch of our ScotiabankAero Platinum MasterCard®Credit Card which offers flexible travelrewards. We have upgraded our retail internet banking platformwith enhanced cross-currency and third party transfer capabilities,offering greater convenience and choice for customers to do theirbanking.

Our drive to improve efficiency continued during the year as weachieved further gains in supplier management, consolidation andother cost management strategies. We completed the electronicimaging of all signature cards and other account openingdocuments during the year, creating greater efficiencies andenhanced customer experience at the front line in our branches.We are extremely proud of the enthusiasm of our team membersin generating ideas for cost-savings and supporting the execution ofcost-saving initiatives.

At Scotiabank Group, we recognize that the development of strongleaders is critical to our continued success. We continued to expand

our leadership resource planning programme and we also investedheavily in coaching, mentorship and other leadership developmentprogrammes to expand the depth of our leadership across theGroup.

These initiatives contributed to the success we enjoyed this yearand have laid the foundation for continued solid performance in thenear and medium-term.

The Way AheadThe next financial year will likely see us continuing to operate in anuncertain and challenging economic environment. As the threat ofongoing recessions in the United States and Europe looms larger,our country will be negatively impacted by any further fallout ineconomic activity in our largest trading partners.

Despite this uncertainty, we see opportunities for growth in ourbusiness. We intend to execute on our brand promise of “DiscoverWhat’s Possible” as we work with our customers to consistentlyuncover opportunities for financial growth and assist them inattaining financial stability. We also intend to grow market share inthose market segments which are either underserved or havegrowth potential. Our investment in the microfinance business is butone such opportunity which we are confident will reap great rewardand support growth in our economy.

Our strong market position and brand, our effective business model,and strong execution capabilities place us in a good position to seizeopportunities and position ourselves for future long-term,sustainable growth.

Our strategic priorities and ingrained core values will guide us, aswe continue to balance expectations for growth and performanceagainst acceptable levels of risk and capital. We remain convincedthat we have made the right strategic decisions in critical areas ofour business, and are confident about our continued success.

In closing, we would like to thank the exceptional Scotiabank Groupteam for their continued commitment to deliver these strong results.We also want to thank all our customers for their unwaveringsupport, insightful feedback and continued confidence in ourinstitution. We stand resolute in our fiduciary responsibility to all ourstakeholders as we continue to be the institution of choice inJamaica.

BRUCE BOWENPresident & CEO

BRIAN PORTERChairman


One of the primary responsibilities of the Board of ScotiaGroup Jamaica Limited is to ensure that the Group and itssubsidiaries have a robust and effective corporategovernance framework. An effective corporate governancepolicy is vital to the preservation of shareholder value andconfidence in the Group and its subsidiaries.

In fulfilling this responsibility, the Board adopts an enterprisewide approach to corporate governance to ensure adherenceto a uniform set of corporate governance policies throughoutthe Group, deviating only where required by laws andregulations relevant to a particular subsidiary.

The Corporate Governance Policy is reviewed annually by theBoard to ensure that it remains current and in accordancewith local laws, regulations and local and international bestpractices, including the Jamaica Stock Exchange Rules andStandards of Best Practices of the Bank of Jamaica.

During the Board’s review this year, the CorporateGovernance Policy was supplemented by the inclusion ofparticular aspects of the PSOJ’s Corporate Governance Code.A copy of our Corporate Governance Policy is available onour website at http://www.scotiabank.com/jm/cda/content/0,1244,CCDjm_CID161_LIDen_SID4_YID1,00.html

The Board of Directors The Board of Directors is committed to ensuring valuecreation for its shareholders, monitoring management andBoard performance, ensuring compliance with regulatoryrequirements, statutory requirements and best practices. Tothis end, the Board of Directors works closely withManagement by providing advice and counsel to the ChiefExecutive Officer to ensure that key strategic objectives areachieved.

BOARD RESPONSIBILITY The Board’s primary responsibility is to supervise themanagement of the Company and provide effectivegovernance over the Company’s affairs. In so doing, it muststrive to balance the interests of the Group’s diverseconstituencies, including its shareholders, customers,employees and the communities in which it operates. At alltimes, the Directors are expected to exercise independentbusiness judgment in what they reasonably believe to be inthe best interests of the Company. In discharging thatobligation, Directors may rely on the honesty and integrity ofthe Company’s Senior Management, its outside advisors andauditors.

The responsibility of the Board is outlined in an approvedBoard mandate which includes the following key duties andfunctions:

• Develop the Group’s approach to corporate governanceand its principles and guidelines;

• Oversee and approve the Group’s strategic direction, theorganizational structure and succession planning ofsenior management;

• Evaluate the actual operating and financial results of theGroup against the Group’s business objectives, businessstrategy and plans;

• Identify the principal business risks, review and approvekey risk management policies and practices and overseethe implementation of appropriate systems to enablecompliance with such policy;

• Approve appropriate and prudent credit, market, liquidityand operational risk management policies;

• Oversee the integrity of the Group’s internal controls andmanagement information systems;

• Ensure the Board receives from senior management theinformation and input required to enable the Board toeffectively perform its duties;

• Identify, evaluate and select candidates for the Board ofthe Company and that of its subsidiaries;

• Establish committees of the Group and subsidiary Boardswith appropriate responsibilities and appoint Chairs forthese Committees.

• The conduct and act upon annual assesments andevaluations of the Board, committees of the Board andindividual directors.

Board CompositionUnder the Company’s Articles, the Board membership canrange from 3 to 20 persons. As at October 31, 2011, theBoard has 11 members, possessing diverse skill sets, local andinternational experience, knowledge from key industries andprofessions, and strong leadership skills in their respectivefields. These individuals command the respect of personsinternal and external to the Group and ensure that decisionsare made after careful deliberations.

The majority of the Directors are Independent Directors; 7 ofour 11 Directors were independent of Scotia Group, its parent,subsidiaries and affiliates and 10 members of the Board werenon-executive.

The Chairman of the Board, Mr. Brian Porter, is a NonExecutive Chairman. The Board is committed to having a NonExecutive Chairman to ensure that the Company is managedfor the long term benefit of its major stakeholders.


Corporate Governance

Under our Corporate Governance Policy, a Director is notconsidered independent if:

1. The Director has been an employee of the Company within the last five years;

2. The Director is, or has been within the last three years, anemployee or executive officer of any company within the Group or its parent company;

3. The Director has received or receives additional remuneration from the Company apart from a director’sfee, participates in the company’s share option plan or performance related pay scheme, or is a member of the Company’s pension scheme;

4. The Director has close family ties with any of the Company’s advisors, directors or senior employees;

5. The Director represents a significant shareholder;

6. The Director was a former Chief Executive Officer unless there has been a period of at least three years between ceasing employment with the Company and serving on the Board.

The Table below highlights independent and non-independentDirectors and their respective skill sets.

Director Orientation & Training OpportunitiesNotwithstanding the Board’s solid expertise, our corporategovernance provides for continuous assistance to existing andnew directors in their education about the Group, its variousbusiness lines and their roles and responsibilities.

Directors are provided with regular updates on businessoperations, strategy and regulatory trends.

All Directors have access to and are encouraged to meet withthe Chairman, the Chief Executive Officer and other ExecutiveOfficers, as required and are provided with opportunities tovisit local and international operations.

Appointment, Term, Election & Retirement of DirectorsAll Directors automatically retire from the Board at eachAnnual General Meeting and are elected or re-elected (as thecase may be) by the shareholders at the Annual GeneralMeeting of the Company. As a result of the annualretirement of Directors at the Annual General Meeting, eachDirector effectively serves a term of one year except forDirectors who would have been appointed by the Boardduring the year.

Directors may be appointed to the Board prior to attaining theage of 70.

BOARD EXPERTISE

Independent (I)/Non -Independent (NI)

General Management

Finance & Audit

Strategic Management

Banking

H.R. & Education

Legal

Barbara Alexander I Bruce Bowen NI

Anthony Chang I

Sylvia Chrominska NI

Jeffrey Hall I Charles Johnston, CD I

Warren McDonald, JP I Claude Norfolk NI

Brian Porter NI

Dr. Herbert Thompson, CD I Prof. Stephen Vasciannie I

2 2

B 1 2 A 1

1 2

J

1 C 1 W 1 H

6 R

B D 0 1 P 1 2

*

B

S 1

C

C

D

H

BOARD EXPERTISE

nt General Independe-(I)/Non

Independent BOARD EXPERTISE

General Strategic Finance &

H.R. &

Barbara Alexander

Bruce Bowen

Anthony Chang

Sylvia Chrominska

Jeffrey Hall

CDCharles Johnston,

JPWarren McDonald,

Claude Norfolk

I

Management(NI)General nt Independe

NI

I

NI

I

I

I

CD

NI

JP

Management ManagementAuditStrategic Finance & General

Management EducationBanking LegalH.R. &

Claude Norfolk

Brian Porter

t Thompson, Dr. Herber

Prof. Stephen Vasciannie

NI

NI

I

I

CDt Thompson,

Prof. Stephen Vasciannie



Any director employed to the Company shall cease to be adirector upon termination of any employment contract withthe Company.

Director CompensationThe Board determines the form and amount of Directorcompensation based on an annual review of directorcompensation in the marketplace. Directors who areemployees of any of the subsidiary companies are notcompensated in their capacity as directors.

Guidelines for Business ConductThe Board of Directors, the management and all employees ofthe Group, its subsidiaries and affiliates are required toobserve the Group’s Guidelines for Business Conduct and inthis regard, annual certification of due compliance is required.

The Guidelines for Business Conduct outline the Group’s rulesand expectations regarding proper business conduct andethical behaviour of directors, officers and employees of thesubsidiaries, including: • following the law wherever the Group and its subsidiaries do business;

• avoiding putting themselves or any of the subsidiaries in a conflict of interest;

• conducting themselves honestly and with integrity; • keeping the subsidiaries’ transactions, communications and information accurate, confidential and secure, and all customers’ assets safe; and

• treating everyone fairly and equitably - whether customers, suppliers, employees or others who deal with the Group and its subsidiaries.

In keeping with the established code of conduct, Boardmembers and senior management officers of the Group’ssubsidiaries are subject to our “insider trading policy” inrespect of trading in the securities of the Company, itssubsidiaries and affiliates.

Board Annual Self EvaluationThe Group’s Board and the Boards of each subsidiary conductan annual self evaluation of performance during the year.Directors are required to complete a Corporate Governancequestionnaire which tests a wide range of issues including theinformation provided to the Board by management, theoperation of any Committee and to assess the Board,Chairperson and management performance during the year.

The results are reviewed in detail by the Executive andEnterprise Risk Committee and appropriate actionimplemented to remedy any areas of concern or areasrequiring improvement.

COMMITTEES OF THE BOARDScotia Group Jamaica Limited has an Audit and ConductReview Committee which oversees the Group and The Bankof Nova Scotia Jamaica Limited (the “Bank”) and its

subsidiaries.

Audit and Conduct Review CommitteeThe Terms of Reference of the Group’s Audit and ConductReview Committee are reviewed by the Committee andrecommended to the Board for approval. In accordance withits Terms of Reference, the Audit and Conduct ReviewCommittee has oversight responsibility for the Group and theBank in relation to the following areas:• The integrity of the financial reporting of the Bank and theGroup, disclosures and system of internal controlprocedures over financial reporting;

• Ensuring compliance with legal and regulatoryrequirements;

• The performance of the internal audit and externalauditors;

• To develop and implement policies to identify and resolveconflict of interest which may arise from transactionsconducted by the Group and its subsidiaries.

During the year, the Committee met with external Auditors tothe exclusion of Management and undertook the followingmatters:-

Review and approval of:• Management Accounts for the Group and the Bank• Audited Financial Statements• Internal Audit Plan• Engagement Letter of the external Auditors• Internal Audit Reports• Connected Party List & Transactions• Compliance Reports• Management Letter (KPMG)

This Committee is comprised of five (5) independentDirectors: Anthony Chang (Chairman), Charles Johnston,Barbara Alexander, Warren McDonald and Professor StephenVasciannie. The Audit & Conduct Review Committee met four(4) times during the year and has a strong attendance recordof its members at each meeting.

Board Committees of The Bank of Nova Scotia JamaicaLimited

The Bank has two (2) sub Committees; the HumanResources and Pensions Committee and the Executive andEnterprise Risk Committee. These Committees werereconstituted in May 2011 after an extensive review of theexisting mandates for the Human Resource, Pension andExecutive Committees respectively. The respective Termsof Reference which outline the remit of each Committeewere reviewed by each Committee respectively andrecommended to the Board for approval.

Outlined below are the Terms of Reference of each of theseCommittees and matters reviewed and approved during theyear.

Corporate Governance (continued)

Executive & Enterprise Risk CommitteeThe Executive & Enterprise Risk Committee has responsibilityfor the following areas:-

• Corporate Strategy and Profit Plan of the Bank and its subsidiaries;

• Review of Board nominees prior to appointment;• Appointment and/or reappointment of the Auditors;• Review of the Corporate Governance Policy; • Enterprise wide risk management (credit, market, operational and liquidity risks)

The principal activities undertaken by the Committee duringthe year included the review and recommendation to theBoard of the following matters:-

• Annual Profit Plan

• Amendments to Committee Terms of Reference

• Evaluation of Board performance

• Quarterly Press Releases on financial results

• Market, Operational, Credit and Liquidity Risk Reports

• Revised Risk Management Policies and Limits

• Revised Corporate Governance Policy

The Executive and Enterprise Risk Committee is comprised offive (5) members; three (3) of whom are independentDirectors. The members of the Committee are CharlesJohnston (Chairman), Bruce Bowen, Anthony Chang, SylviaChrominska and Dr. Herbert Thompson.

Human Resources and Pension CommitteeThe mandate of the Human Resources and PensionCommittee is to primarily review the following areas:-

• Staff compensation, including incentive programmes; • Senior level organizational structure and staffing needs;• Mandates for the negotiation of collective bargainingagreements;

• Performance of the Executive Team and Board appointedofficers;

• Pension Plan design and Investment policies;• Monitoring Fund performance against its policies, objectives and strategies;

• Appointment and/or removal of the Sponsor Trustees ofthe Pension Fund;

• Review of actuarial reports, audited financial statement ofthe Fund and proposed changes to the Pension Plan Rulesand benefits.

During the year, the Committee undertook a review andapproval of the following matters:-• Administrative and Fund Management fees• Revised Terms of Reference• Collective Bargaining Strategy for 2012• Overall Pension Fund performance• Pension Plan Enhancements • Senior Management changes• Executive Team performance

The Human Resources & Pension Committee is comprised ofsix (6) members; four (4) of whom are independent Directors.The members of the Committee are Jeffrey Hall (Chairman),Dr. Herbert Thompson, Barbara Alexander, Warren McDonald,Bruce Bowen and Claude Norfolk.

Below is the attendance record of Directors at the AnnualGeneral Meeting, Board and Committee meetings.

B

A

S

J

W C

D

AGM (SGJL)

Board Meeting (SGJL)

Audit & Conduct Review (SGJL/BNSJ)

Executive

(BNSJ)

Human Resources

(BNSJ)

Pension (BNSJ)

No. of Meetings 1 7 4 1 1 2 Barbara Alexander 1 7 4 2 Bruce Bowen 1 7 1 2 Anthony Chang 1

16 3 2

Sylvia Chrominska 7 Jeffrey Hall

1 7 1 Charles Johnston, CD 1 6 4 1 Warren McDonald, JP

11

1

–

– – ––

––

–

––––

––––

–

–––

–

–

–

––––

–––

–

–––––

––

––

6 1 Hon. Mayer Matalon, OJ (Deputy Chairman) ***

Claude Norfolk 6 Robert Pitfield*

Brian Porter (Chairman)** 1 4 Dr. Herbert Thompson, CD 0 5 1 1 Prof. Stephen Vasciannie 1 5 3 1 2

Audit & Conduct Review Committee Chairman Executive Committee Chairman

Human Resources Committee Chairman

*Resigned January 24, 2011

**Appointed January 25, 2011 ***Resigned May 12, 2011

B

S 1

C

C

D

H

y



Corporate Governance (continued)

[Note: The Executive, Human Resources, and Pension Committees werereconstituted by the Board of Directors at its meeting held on May 26,2011. The record shown overleaf on page 9, reflects attendance, prior tothe restructuring of the Committees]

Below is the attendance record of Committee members of the newlyconstituted Committees of the Bank.

Scotia Group is committed to good corporate governance practices andto that end continues to comply with the law and regulations,international best practices and guidance from the Jamaica StockExchange and regulators of our various subsidiaries (Bank of Jamaica andthe Financial Services Commission). We continually strive to preserveshareholder value and confidence in the long term viability andprofitability of the Group.

A

S

J

W C

D

2 2

B 1 2 A 1

1 2

J

1 C 1 W

–

––

–

–

–

–

–

–

–

1 H

6 R

B D 0 1 P 1 2

Executive and Enterprise Risk Chairman

*

HumanResources & Pension Committee (BNSJ)

Executive andEnterprise Risk Committee

(BNSJ)

Number of Meetings for the Year

2 1

Barbara Alexander 1 Bruce Bowen 2 1 Anthony Chang

Sylvia Chrominska 1

Jeffrey Hall 2

Charles Johnston, CD 1

Warren McDonald, JP 2

Claude Norfolk 2

Dr. Herbert Thompson, CD

Human Resources & Pension Committee Chairman

(BNSJ) (BNSJ)

N

CommitteeEnterprise Risk Executive and

Committee Pension Resources & Human

CommitteeEnterprise Risk Executive and

for the Year

Claude Norfolk

, JPWarren McDonald

, CDCharles Johnston

Jeffrey Hall

Sylvia Chrominska

Anthony Chang

Bruce Bowen

Barbara Alexander

Number of Meeti f h

2

–

1

–

Number of Meetings

–

–

2

–

–

–

1

2

2

, JP

1

, CD

2 1

1

Executive and Enterprise Risk Chairman

Dr. Herbert ThompsonClaude Norfolk

–

–

2

–

Executive and Enterprise Risk Chairman Human Resources & Pension Committee Chairman

, CDDr. Herbert Thompson

Human Resources & Pension Committee Chairman


Scotia Group Jamaica Limited

R. H. PitfieldChairman (Former)

Mr. Robert Pitfield is Group Head andChief Risk Officer of the parentcompany, The Bank of Nova Scotia(BNS), with responsibility forenterprise-wide risk management.Prior to this appointment on October1, 2010, he was Group Head,International Banking Division, andwas responsible for all of the Bank’sretail and commercial operationsoutside of Canada and the USA. Hejoined Scotiabank in Toronto inAugust 1983 as a General OfficeTrainee Commercial Officer. He wasappointed Chairman of The Bank ofNova Scotia Jamaica Limited on May22, 2003 and Scotia Group JamaicaLimited on March 15, 2007.

Mr. Pitfield resigned on January 24,2011 to assume the position ofGroup Head and Chief Risk Officer ofBNS.

Mr. Pitfield is a graduate of theUniversity of Toronto and theUniversity of Ottawa and is amember of the Law Society of UpperCanada.

(Resigned as Chairman January 24, 2011)

B. PorterChairman

Mr. Brian Porter is Group HeadInternational Banking Division of theparent Company, The Bank of NovaScotia and oversees all of the Bank'spersonal, small business andcommercial banking operations insome 50 countries outside ofCanada. He joined Scotiabank in1981 and held a variety ofmanagement positions, includingDeputy Chairman, Scotia Capitalprior to his appointment as ExecutiveVice-President and Chief Risk Officer,in 2005.

Mr. Porter was appointed Chairmanof Scotia Group Jamaica Limited andThe Bank of Nova Scotia JamaicaLimited on January 25, 2011.

Mr. Porter is the past Chairman of theInvestment Dealers Association ofCanada (IDA) and a member of theFaculty of Management Board ofAdvisors, Dalhousie University. Hereceived a Bachelor of Commercedegree from Dalhousie Universityand is a graduate of the AdvancedManagement Programme ofHarvard Business School.

(Appointed Chairman January 25, 2011)

The Honourable M. M. Matalon,OJDeputy Chairman (Former)

The Honourable Mayer Matalon isthe Deputy Chairman of the I.C.D.Group Limited. He has been theDeputy Chairman of the Boards ofThe Bank of Nova Scotia JamaicaLimited and of Scotia Group JamaicaLimited up until his resignations fromthese Boards effective May 12,2011.

Mr. Matalon has been a Director ofThe Bank of Nova Scotia JamaicaLimited since 1966.

Mr. Matalon is the recipient of aDoctor of Laws Honoris Causa bythe University of the West Indies, andan Honorary Doctorate from theUniversity of Technology.

(Resigned May 12, 2011)

Board of Directors

Corporate Governance (continued) – Scotia Group Jamaica Ltd. Board of Directors


B. F. Bowen

Mr. Bruce Bowen is the President &CEO of Scotia Group JamaicaLimited since November 27, 2008.

He began his career with Scotiabankin 1990 in the International Division.His career at Scotiabank hasexposed him to various areas inbanking and has taken him onassignments for Scotiabank to theCayman Islands, Trinidad & Tobago,Jamaica and Puerto Rico.

Mr. Bowen was appointed to theBoard of Scotia Group JamaicaLimited on November 27, 2008 andis a member of the Executive andEnterprise Risk Committee and theHuman Resources & PensionCommittee of the Board. He is also aDirector of The Bank of Nova ScotiaJamaica Limited, The Scotia JamaicaBuilding Society, Scotia Jamaica LifeInsurance Company Limited, ScotiaInvestments Jamaica Limited,Scotiabank Jamaica Foundation andScotia Jamaica Microfinance Co.Limited.

Mr. Bowen holds an HonoursBachelor of Business Administrationdegree from Wilfrid LaurierUniversity in Waterloo, Ontario,Canada.

B. A. Alexander

Ms. Barbara Alexander wasappointed to the Board onNovember 26, 2007. She has beenan Attorney-at-Law and Partner inthe law firm Myers, Fletcher &Gordon since 1980, and is now theManaging Partner of the law firm.Her experience includes Bankingand Finance, Project Finance, RealEstate and Commercial Law. She isa member of the Audit & ConductReview Committee and theHuman Resources and PensionsCommittee of the Board, aDirector of Scotia InvestmentsJamaica Limited, Scotia AssetManagement (Jamaica) Limited,The Scotia Jamaica BuildingSociety, United Way of Jamaicaand the Arts Foundation of theEdna Manley College.

Ms. Alexander is a graduate of theUniversity of the West Indies andis a member of the Jamaican BarAssociation and the Law Societyof England, United Kingdom.

A. V. Chang

Mr. Anthony Chang was appointedto the Board of The Bank of NovaScotia Jamaica Limited on February5, 2001 and is a member of theAudit & Conduct Review and theExecutive and Enterprise RiskCommittees of the Board. Mr. Changis the Chairman of Scotia JamaicaLife Insurance Company Limited, andsits on the board of ScotiaInvestments Jamaica Limited.

He is a graduate of Richard IveySchool of Business, University ofWestern Ontario. He is also therecipient of the Hubert H. Humphreyfellow at American University,Washington, DC which was awardedby the Government of the UnitedStates of America. He hascompleted professional courses withseveral organizations some of whichinclude York & Wharton University.


S. D. Chrominska

Ms. Sylvia Chrominska joined Scotiabank in 1979 and has servedin several capacities including SeniorVice-President, Corporate Credit andExecutive Vice-President, HumanResources. In 2008, she wasappointed Group Head, GlobalHuman Resources and Commun-ications.

She serves on the Board of Directorsof Emera Inc., and The Bank of NovaScotia Jamaica Limited and is amember of the Executive and Enterprise Risk Committee of theBoard.

In 2007, Ms. Chrominska wasinducted in the Hall of Fame ofCanada's Top 100 Most PowerfulWomen. In 2010, she was theinaugural recipient of the CatalystCanada Honours in the category ofHuman Resources/Diversity Leader.

J. M. Hall

Mr. Jeffrey Hall is Chief ExecutiveOfficer of Jamaica ProducersGroup Limited and has workedwith that Company since 2002.Mr. Hall was appointed to theBoard of Directors of Scotia GroupJamaica Limited and The Bank ofNova Scotia Jamaica Limited(BNSJ) on November 26, 2007.He is the Chairman of the HumanResources and Pension Committeeof BNSJ. Mr. Hall currently servesas a director of the Blue PowerGroup Limited, the Agro-InvestCorporation, the Institute ofJamaica Museums and JamaicaInvestment Promotions (JAMPRO).He has practiced as an Attorney-at-Law and has served as aDirector of the Jamaica StockExchange and the Bank ofJamaica.

Mr. Hall is a graduate of HarvardLaw School and holds a Bachelor'sdegree in Economics from theWashington University and aMasters in Public Policy fromHarvard University.

C. H. Johnston, CD

Mr. Charles Johnston is the Chairmanand Managing Director of JamaicaFruit and Shipping Company Limitedand Chairman of Jamaica ProducersGroup. He was appointed to theBoard of The Bank of Nova ScotiaJamaica Limited on August 22, 2002and is the Chairman of the Executive& Enterprise Risk Committee and amember of the Audit & ConductReview Committee.

Mr. Johnston is a graduate of theWharton School of Finance &Commerce, at the University ofPennsylvania.


Corporate Governance (continued) – Scotia Group Jamaica Ltd. Board of Directors

C. S. Norfolk

Mr. Claude Norfolk is the SeniorVice-President, International Bank-ing - Caribbean Region of The Bankof Nova Scotia.

He is Vice-Chairman ofScotiabank's affiliate, Maduro &Curiel's Bank in the NetherlandAntilles.

Mr. Norfolk is on the Board ofDirectors of Scotiabank Trinidad &Tobago Limited, Scotiatrust andScotia Merchant Bank Trinidad andTobago Limited, where he is amember of the Audit Committee.He also sits on the Board ofDirectors of Scotiabank BahamasLimited and The Bank of NovaScotia Jamaica Limited and is amember of the Human Resourcesand Pension Committee.

Mr. Norfolk has a Masters ofBusiness Administration, FinancialServices from Dalhousie Universityand holds the ICD. D certification forCorporate Directorship 2010.

W. A. McDonald, JP

Mr. Warren McDonald is theManaging Director and ChiefExecutive Officer of Berger PaintsJamaica Ltd. He is also theManaging Director for Berger in theCaribbean and supervises theBerger subsidiaries in Trinidad &Tobago and Barbados.

He was appointed to the Board ofDirectors of Scotia Group JamaicaLimited on March 15, 2007 and TheBank of Nova Scotia JamaicaLimited (BNSJ) on February 5,2001. Mr. McDonald is a memberof the Audit & Conduct ReviewCommittee and the HumanResources & Pension Committee ofBNSJ.

Mr. McDonald is the Vice-Presidentof the Jamaica Chamber ofCommerce, and the Chairman ofthe Board of the PortmoreCommunity College. Mr. McDonaldis a Honours graduate from theUniversity of the West Indies, aFellow of the Chartered Associationof Certified Accountants of theUnited Kingdom and the Institute ofChartered Accountants ofJamaica.


Dr. H. J. Thompson,CD

Dr. Herbert Thompson is the ProChancellor of the University Collegeof the Caribbean. He was appointedto the Board of The Bank of NovaScotia Jamaica Limited on August19, 1998 and is a member of theExecutive and Enterprise RiskCommittee and the HumanResources and Pension Committeeof the Board. Dr. Thompson is alsoChairman of the Board of TheScotia Jamaica Building Society.

Dr. Thompson is a motivationalspeaker and an author. He is agraduate of Northern CaribbeanUniversity, the University of theWest Indies, with a Doctorate inPhilosophy, (PhD) Biochemistry andMasters in Physiology from LomaLinda University.

Prof. S. C. Vasciannie

Professor Stephen Vasciannie is thePrincipal of the Norman ManleyLaw School. He was appointed aDirector of The Bank of Nova ScotiaJamaica Limited on September 1,2005, and is currently a member ofthe Audit and Conduct ReviewCommittee. Professor Vasciannie isa director of Scotia Jamaica LifeInsurance Company Limited andChairman of Scotia InvestmentsJamaica Limited.

He is a graduate of the Universitiesof Oxford, Cambridge and theUniversity of the West Indies. Since2006, he has been a member of theUnited Nations International LawCommission, Geneva, and servedas the Rapporteur for the 2010Session of the Commission. He isChairman of the Kingston College,a member of the Jamaican BarAssociation, the American Societyof International Law, the BritishInstitute of International andComparative Law, and has servedas a member of the Inter-AmericanJuridical Committee.


Executive Management TeamBruce BowenPresident and CEO Scotiabank Group

Bruce Bowen is the President and CEO,Scotiabank Group Jamaica Limited. Heassumed this position on November 1,2008, coming from Scotiabank de PuertoRico where he held a similar position.

Bruce Bowen began his career withScotiabank in 1990 in the InternationalDivision. His career at Scotiabank hasexposed him to various areas in bankingand has taken him on assignments forScotiabank to the Cayman Islands, Trinidad& Tobago, Jamaica and Puerto Rico.

Bruce was appointed to the Board ofScotia Group Jamaica Limited onNovember 27, 2008 and is a member ofthe Executive and Pension Committees ofthe Board. He is also a Director of the TheBank of Nova Scotia Jamaica Limited, TheScotia Jamaica Building Society, ScotiaJamaica Life Insurance Company Limited,Scotia Investments Jamaica Limited andScotiabank Jamaica Foundation andScotia Jamaica Microfinance Co. Limited.

Bruce holds an Honours Bachelor ofBusiness Administration degree fromWilfrid Laurier University in Waterloo,Ontario, Canada.

Monique FrenchSenior Vice-PresidentCredit Risk Management

As the Senior Vice-President - RiskManagement, Monique French isresponsible for the structure, risk profile,and quality of the retail, commercial andcorporate credit portfolios of ScotiabankGroup (Jamaica).

Monique possesses over a decade ofexperience in Credit & Market RiskManagement, Corporate Banking andTreasury & Derivatives. During her career,she has held Senior Management positionsin Risk Management and Treasury, and ledor served on several industry and privatesector committees.

Monique holds a BSc Accounting Degree(First Class Honours) from the University ofthe West Indies, and a Master of BusinessAdministration Degree from the RichardIvey Business School, University of WesternOntario, Canada. She has completed theCanadian Securities Course, is a CFACharter Holder and an IBM Scholar.Monique serves as a Justice of the Peacefor Kingston.

Monique is a member of the Asset andLiability Committee (ALCO) & InvestmentCommittees, and an alternate Director forThe Bank of Nova Scotia Jamaica Limited.

1

1

2 23

4

6

7

8

5


Michael JonesSenior Vice-PresidentHuman Resources

Michael Jones has held key roles acrossthe company, including Manager-Accounting, Assistant General Manager -Operations, and currently Senior Vice-President - Human Resources, ScotiabankGroup.

Michael completed under-graduatestudies in Banking at CAST/University ofTechnology, and is a graduate Associateof both the UK Chartered Institute ofBankers (ACIB), as well the Institute ofChartered Secretaries and Administrators(ACIS). He holds a MSc in Social Sciencesfrom the University of Leicester, and aMBA (Distinction) from the ManchesterBusiness School/University of Wales.Michael is also a graduate of the ExecutiveHuman Resource Management program-me of the University of Michigan.

Michael is a Director on the Board of theScotiabank Jamaica Foundation and isChairman of the ScotiaBRIDGE Board ofTrustees. He also serves the widercommunity as President of the HumanResource Management Association ofJamaica, chair of the JIFS executivecommittee, Director on the UWI Careerand Placement Board, and the HopeGardens/Nature Preservation Foundation.He also serves as a member of the PSOJEducation Committee.

H. Wayne PowellExecutive Vice-President Retail Banking

A career banker of many years, WaynePowell is Executive Vice-President, RetailBanking with responsibility for themanagement of the Branch Network,Small and Medium Enterprise BusinessBanking, Customer Experience and Non-Branch Sales. He also has oversightresponsibilities for The Scotia JamaicaBuilding Society.

He is an Associate of the CharteredInstitute of Bankers and has a MBA fromBarry University, as well as Certificates inMarketing Management and ExecutiveManagement from the Ivey School ofBusiness, University of Western Ontario.

Wayne is a Justice of the Peace, analternate Director of the ScotiabankBoard, Chairman of The ScotiabankJamaica Foundation and serves on severaladditional corporate boards. In 2010,Wayne was inducted as a Life Member ofthe Cambridge Who’s Who Registry ofExecutives, Professionals andEntrepreneurs.

Hugh MillerVice-President Treasury

Hugh Miller joined Scotiabank in 1998 andhas worked in Securities Trading &Investments, as well as, Pension & AssetsManagement. Hugh is currentlyresponsible for the strategic managementof the Group’s treasury operations,investment and trading activities, andforeign exchange trading activities.

Hugh holds a Bachelor of Science (B.Sc.)degree with Honours in Economics(Accounting minor) from the University ofthe West Indies, and is a CFACharterholder.

He serves on the Board of Trustees ofScotiaBRIDGE and Scotiabank’s PensionPlan. He is a member of ScotiaInvestments' Asset and LiabilityCommittee, Scotia Investments' ManagedFunds Investment Committee andScotiabank’s Asset and LiabilityCommittee.

Rosemarie PillinerExecutive Vice-PresidentOperations & Shared Services

Rosemarie Pilliner currently holds theposition of Executive Vice-President,Operations and Shared Services. She hasdirect responsibility for Lending Services,Processing Support, Procurement,Operations and Shared Services, Security& Investigations, Facilities Managementamong other functional areas.

Rosemarie has extensive knowledge ofScotiabank’s core operations. Her wide-ranging expertise spans varying positionswithin the organization, includingmanagement positions in centraloperations, Branch Manager and AssistantGeneral Manager of The System SupportCentre.

Rosemarie has benefited from severalmanagement training courses to hone hercredit, leadership, operations andorganization developmental skill sets. Shecurrently sits on the Board of theScotiabank Jamaica Foundation.

Hugh ReidSenior Vice-President & General ManagerScotia Jamaica Life Insurance Company Limited

Hugh Reid has a wealth of experience inthe financial sector and in his capacity asGeneral Manager, he is responsible fordriving the growth and profitability ofScotia Insurance.

Prior to joining Scotiabank Group, Hughheld the post of Senior Vice-President &Chief Operating Officer at Victoria MutualBuilding Society. He has also heldexecutive level positions at NationalHousing Trust, Prime Life AssuranceCompany, and the former Life of Jamaica.

Hugh currently holds a Masters of Sciencein Accounting and a Bachelor of Sciencein Economics from the University of theWest Indies. He is also a Fellow of the LifeManagement Institute (US), Institute ofChartered Accountants (Jamaica) andthe Chartered Association of CertifiedAccountants (UK). Hugh is also a Fellow ofthe Jamaican Institute of Management inrecognition of his sterling service to theprivate and public sectors as well as theKiwanis movement. He currently serves asan independent member on the Audit sub-committee of the Early ChildhoodCommission.

4 Lissant MitchellChief Operating OfficerScotia Investments Jamaica Limited

Lissant Mitchell has over 18 yearsexperience in the local financial industry.He joined Scotia Investments in October2007 as Senior Vice-President Treasuryand Capital Markets and was promoted toChief Operating Officer in October 2010.Lissant has served as the President of thePrimary Dealers Association and iscurrently the Secretary of the JamaicaSecurity Dealers Association. Lissant sitson the Scotiabank and Scotia InvestmentsAsset and Liability Committees as well asthe Group's Managed Funds InvestmentCommittee. He is also a Director of ScotiaAsset Management Jamaica Limited,Scotia Caribbean Income Fund and theJamaica Stock Exchange. Lissant holds aMBA from the University of Manchesterand a BSc in Accounting and Economicsfrom the University of the West Indies.

53

6 7 8


Monique ToddVice-PresidentMarketing, Public & Corporate Affairs

Monique Todd leads the Marketing, Public& Corporate Affairs team withresponsibility for formulating and directingthe Group’s marketing, public andcorporate affairs strategies to improvebrand equity, positioning and portfoliogrowth.

Monique has over 14 years experience inmarketing with 10 of those yearsspecifically focused in the financialindustry. She joined Scotiabank in 2006 asSenior Marketing Manager and during hertenure her role was expanded toMarketing Director for WealthManagement.

Monique holds a Bachelor of BusinessAdministration, Honours from WilfridLaurier University in Ontario, Canada.Monique is the Co-Chair of the JamaicaBanker's Association Marketing & PublicRelations Committee and is the Past Chairof the Insurance Association of Jamaica’sPublic Relations Committee. She alsoserves as a member of the Bank’s ServiceManagement Committee and ProductPricing ALCO Committee; and ScotiaJamaica Life Insurance Company Limited’sInvestment Advisory Committee. She isalso a Director of the Scotiabank JamaicaFoundation.

Anya SchnoorExecutive Vice-PresidentWealth Management & Insurance andCEO, Scotia Investments Limited

As Executive Vice-President, WealthManagement & Insurance, Anya Schnooris responsible for the Group’s WealthManagement & Insurance Division whichincludes Scotia Jamaica Life InsuranceCompany Limited, Scotia Private ClientGroup and Scotia Investments JamaicaLimited, of which she is the ChiefExecutive Officer.

Anya Schnoor has over 18 years ofexperience in the areas of wealthmanagement and banking. She holds anMBA from Barry University and a BA inFinance and International Business fromFlorida International University.

Anya served as the Past President of theJamaica Security Dealers Association andsits on the Boards of Scotia InvestmentsJamaica Limited, Scotia Fund ManagersLimited, Asset Management CompanyLimited, Scotia Caribbean Income Fund,The Jamaica Stock Exchange and TheJamaica Cricket DevelopmentFoundation. In addition she is also amember of Scotiabank Jamaica’s Assetand Liability Committee (ALCO) and theFinance Committee of Heart Trust NTA.

Jacqueline Sharp Senior Vice-President Chief Financial Officer & Chief Administrative Officer

In her current role, Jackie is responsible forvarious functions including Financial andRegulatory reporting, Financial RiskManagement, Strategic Planning, Legal,Compliance, and oversight of the SystemsSupport Centre for the Group. She hasover 16 years experience in the financialservices industry, and has worked withScotiabank since 1997 in several areasincluding Treasury, Finance, PrivateBanking and as head of Scotia JamaicaLife Insurance Company Limited.

Jackie holds a Bachelor of Science (BSc.)degree with honours in Accounting fromthe University of the West Indies, is a CFACharter Holder and has successfullycompleted the Certified Public Accountant(CPA) examinations.

She serves as a member of the Board ofScotia Asset Management (Jamaica)Limited, the Group's Asset and LiabilityCommittee, SJLIC Investment AdvisoryCommittee and is Chair of the Board ofTrustees of BNSJ's Pension Plan. Jackiealso serves as the Treasurer of the PrivateSector Organization of Jamaica.

Executive Management Team (continued)

Michael ThompsonSenior Vice-PresidentCorporate & Commercial Banking(CCBC)

Michael Thompson is a career bankerand has held several leadershippositions in retail, commercial andmerchant banking. He hasdistinguished himself as a sales leaderwith a passion for working with teamsto achieve their goals. Michael hasreceived several awards for hisoutstanding achievement in sales(loans and investments) in bothCanada and Jamaica. He joined theCCBC team in January 2011 and isresponsible for the overall success ofthe Corporate & Commercial Businessline within the country. Prior to hiscurrent role, Michael served as DVP,District North; Assistant GeneralManager, Business Development,CCBC as well as Senior RelationshipManager, CCBC.

Michael holds a Banking Diploma fromthe Chartered Institute of Bankers,London, England and a Bachelor ofBusiness Administration (Finance) fromthe University of the District ofColumbia, U.S.A. He has alsocompleted the Diploma programme inBank Management at the SparbanksUniversitetet, Stockholm, Sweden aswell as a Project Management Courseat York University, Toronto, Canada.

8 9 10

11 Gladstone WhitelockeVice-President Non-Branch Sales & General ManagerThe Scotia Jamaica Building Society

Gladstone Whitelocke has been withScotiabank for over 25 years with a career that has spanned RetailBanking, Loan Recoveries, ProjectManagement, and ResidentialMortgages. He also received extensivetraining overseas in the DomesticBank, in the areas of Retail &Commercial Lending and Mortgages.

In his current role, Gladstone isresponsible for the Group's mortgageloan business as well as Retail businessdevelopment in non-branch environ-ments.

He completed courses in Banking andFinance at the University ofTechnology, Certificates in ProjectManagement and Sales Managementfrom the University of New Orleansand holds an MBA (Finance) fromManchester Business School.

Gladstone currently serves on theAsset and Liability Committee ofScotia Group Jamaica Limited.

12


8

9

1011

12

Investment Management Services

Financial Highlights 2011 2010$ millons $ millons

Total Assets 332,041 325,824 Investment Securities 157,018 151,896 Loans net of provisions for losses 99,976

95,814

Deposits by the public 144,670

145,664 Liabilities under repurchase agreements and other client obligations 58,942

60,182

Policyholders' Fund 39,020

36,891

Shareholders' equity 60,311 53,155

Net Profit after tax 10,618 10,702

Return on equity 17.59% 20.78%

Earnings per share (cents) 328

334

Dividend per share (cents) 148 148

Total Revenue 2011 2010 Change Change% $'000 $'000 $'000

Retail Banking 12,425,165 11,504,813 920,352 8%

Corporate & Commercial Banking

6,524,034 6,855,015

(330,981)

-5%

Treasury 2,392,034 3,097,665

(705,631)

-23%

Insurance Services 5,285,973 5,392,943

(106,970)

-2%

3,873,755 3,575,033

298,722

8%

Other (33,885)

69,112 (102,997)

-149%

30,467,076 30,494,581

(27,505)

-0.1%

Taxation Charge2011$’000

2010$’000

2009$’000

2008$’000

2007$’000

Profit Before Taxes 14,244,620 14,417,094 15,379,659 13,119,095 10,167,221

Current Income Tax:

Income tax calculated at 33 1/3% 2,615,111 2,691,532 2,681,103 2,431,611 2,143,822

Income tax calculated at 30% 237,560 197,563 194,427 192,037 164,227

Premium tax calculated at 3% 112,800 96,444 81,383 93,199 81,226 Investment Income tax calculated at 15% 501,632 664,339 447,420 183,590 122,913

3,467,103 3,649,878 3,404,333 2,900,437 2,512,188

Deferred Income Tax 159,862 65,449 369,867 594,601 44,973

Taxation Charge 3,626,965 3,715,327 3,774,200 3,495,038 2,557,161

Effective Tax Rate 25.5% 25.8% 24.5% 26.6% 25.2%

Loan Loss Provision (LLP) Analysis 2011$’000

2010$’000

2009$’000

Gross Loans 101,992,844 97,409,156 93,264,752

Non Accrual Loans 5,257,217 4,215,254 3,587,030

IFRS LLP 2,016,405 1,594,659 1,086,441

IFRS LLP as a % of Gross Loans 1.98% 1.64% 1.16%

IFRS LLP as a % of Non Accrual Loans 38.35% 37.83% 30.29%Loan Loss Reserve 2,251,257 2,093,499 1,715,750

Total Regulatory LLP 4,267,662 3,688,158 2,802,191

Total Regulatory LLP as a % of Gross Loans 4.18% 3.79% 3.00%

Total Regulatory LLP as a % of Non Accrual Loans 81.18% 87.50% 78.12%

2010 2011

$ billions Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Gross Operating Income 12.0 11.0 9.7 9.8 9.9 9.5 9.4 9.3

Total Operating Income 7.9 7.9 7.1 7.5 7.3 7.5 7.2 7.1

Operating Expenses 3.7 3.8 3.4 3.6 3.7 3.7 3.8 3.6

Net Income 2.8 2.7 2.4 2.9 2.7 2.8 2.5 2.7 Earnings per share (cents) 90c 85c 74c 90c 83c 85c 78c 81c

ROE (percentage) 24.20% 22.06% 18.29% 19.63% 19.16% 18.95% 16.66% 16.83% Total Assets 321 324 316 326 326 338 335 332 Shareholders’ Equity 47 49 51 53 55 57 59 60

Gross Operating Income

$ billions

9.7

Q3

10

Q2Q1

20

11.012.0Gross Operating Income

9.5

Q2

1

Q1Q4Q3

201

9.99.89.7

9.3

Q4Q39.4

Shareholders’ Equity

Total Assets

ROE (percentage)

ngs per share (cents)Net Income

Operating ExpensesTotal Operating Income

Earni

51

316

18.29%

74c2.4

3.47.1

4947

324321

22.06%24.20%

85c90cngs per share (cents)2.72.8

3.83.77.97.9Total Operating Income

57

38

16.66

85c2.8

75

555351

3632326316

%19.1619.63%18.29%

c8390c74c72.2.92.4

3.3.73.63.47.37.7.57.1

60

32

16.83%

81c2.7

3.67.1

95

3335

%16.66

c872.5

83.27.

Loan Loss ReserveIFRS LLP as a % of Non Accrual Loans

IFRS LLP as a % of Gross Loans

IFRS LLP

Non Accrual Loans

Gross Loans

2,251,257

38.35%

1.98%

2,016,405

5,257,217

101,992,844

$’000

IFRS LLP as a % of Non Accrual Loans


2011

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752

$’000

2,093,499

37.83%

1.64%

1,594,659

4,215,254

97,409,156

2009$’000

0201

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752

Income tax calculated at 30%

Income tax calculated at 33 1/3%

Current Income Tax:

Profit Before Taxes

Total Regulatory LLP as a % of Non Accrual Loans

Total Regulatory LLP as a % of Gross Loans

Total Regulatory LLP

197,563

2,691,532

14,417,094$’000

81.18%

4.18%

4,267,662

237,560Income tax calculated at 30%

2,615,111Income tax calculated at 33 1/3%

14,244,620

2010$’0002011



164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

192,037194,427197,563

2,431,6112,681,1032,691,532

13,119,09515,379,65914,417,094

2007$’0002008

$’0002009

$’000

87.50%81.18%

3.79%4.18%

3,688,158

164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

2007

Effective Tax Rate

Taxation ChargeDeferred Income Tax

Investment Income tax calculated at 15%Premium tax calculated at 3%

25.8%

3,715,32765,449

3,649,878

664,33996,444

197,563

25.5%

3,626,965159,862

3,467,103

501,632Investment Income tax calculated at 15%112,800Premium tax calculated at 3%

237,560

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

26.6%24.5%25.8%

3,495,0383,774,2003,715,327594,601369,86765,449

2,900,4373,404,3333,649,878

183,590447,420664,33993,19981,38396,444

192,037194,427197,563

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

Return on equity

Net Profit after tax

Shareholders' equity

Policyholders' Fund

Liabilities under repurchase agreements and other client

eposits by the publicLoans net of provisions for lossesInvestment Securities

Assets

D

otalT

17.59%

10,618

1

39,020

58,942

144,67099,976

157,018

332,041

$ millons

160,3

obligationsLiabilities under repurchase agreements and other client

2011

20.78%

10,702

53,155

36,891

60,182

145,66495,814

151,896

325,824

$ millons2010

5,392,943

3,097,665

6,855,015

1,504,813

$'000

5,285,973Insurance Services

2,392,034reasuryT

6,524,034Commercial BankingCorporate &

112,425,165Retail Banking

$'00020102011

-2%

-23%

-5%

8%

$'000

(106,970)5,392,943

(705,631)3,097,665

(330,981)6,855,015

920,3521,504,813

$'000 % ChangeChange2010

Dividend per share (cents)

Earnings per share (cents)

148

328

148

334

30,494,581

69,

ServicesInvestment Management 3,575,033

30,467,076

(33,885)Other

3,873,755

-0.1%

-149%

8%

(27,505)30,494,581

(102,997)12169,

298,7223,575,033

Management’s Discussion & Analysis



OVERVIEW

PRINCIPAL ACTIVITIES

Scotia Group Jamaica Limited (Scotia Group) is one of thelargest banking and financial service organisations in Jamaica,with assets of $326 billion as at October 31, 2011. ScotiaGroup delivers banking, mortgage-financing, investment andinsurance services, through its main subsidiaries to a widebase of personal, commercial, corporate and governmentclients across Jamaica. In October 2011, we formed ournewest subsidiary, Scotia Jamaica Microfinance CompanyLimited (CrediScotia), which will provide access to credit forentrepreneurs within the microfinance industry.

Scotia Group has been operating in Jamaica for over 122years and is supported by a network of some 50 offices and2,335 employees. Our parent company, The Bank of NovaScotia, is headquartered in Toronto, Canada.

Strategic Priorities Our strategic priorities are the roadmap for our continuedlong-term success, as we strive to remain the institution ofchoice in the Jamaican financial services sector. Our strategicgoals are aligned to benefit our customers, shareholders, staffand Jamaica.

(1)Sustainable Revenue GrowthStrengthening existing customer relationships andacquiring new customers is key to growing our revenue sources in a sustainable and profitable way. This year, we continued to deliver new products and services to meet the changing needs of our diverse customer base, while working towards creating a seamless customer experience across the Group.

(2)Expense Control / EfficienciesOur culture of managing expenses and operating efficiently is a hallmark of our tradition. We monitoredour spending growth, improved our procurement practices, and pursued opportunities to improveproductivity throughout the year. We continued to consolidate key support functions across the Group

and the Caribbean, thereby creating centres of excellence and improving efficiency in our operations.

(3)Leadership & Capability Development Successful execution of our strategies is dependent onhaving the right leaders in place throughout theorganisation. We continued to focus on identifying anddeveloping top talent, and recruiting the right people forthe right job. Leadership development also ensuredthat we have an adequate talent pool of individualsready to assume responsibility for key positions within the Group.

Our strategy is grounded in our robust risk managementculture where risks must be understood, measured andmanaged. Our risk management framework incorporates riskprinciples and risk appetite measures which guide themanagement of our business lines. We continued tostrengthen our risk management framework and processesthroughout the year.

We are confident about our strategic direction and our abilityto execute based on our committed team and infrastructure,which is supported by the global strength of Scotiabank, andthe strength of our capital base.

GROUP FINANCIAL PERFORMANCE

Scotia Group reported Net Income available to commonshareholders for the year of $10,618 million, a decrease of $84million or 0.8% when compared to the same period last year.

Management’s Discussion & Analysis (continued)


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26%

10%

23%

24%

seeail banking fteR

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2011

2010

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2010

7,326

8,038

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2009

2008

2007

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2007

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5,287

6,334

5,843

9,0007,5006,0004,5003,000

Other MarkT

SysPr

Other tisingerdvting & AeMark

ation and CommunicatansporrT

sed expensetelaem rtSyss including depry expensetoperPr

tion

tionecias including depr

omeest Inct InterNe

Changes in Neolume Analysis oate & VR

omeest Inct InterChanges in Nef olume Analysis o

2011

2010

2009

2008

2007

14,858

19,354

25,297

23,168

22,429

olume VV

eariancolume V

omet Incseert IntNe

eariance VtaR

ome

0

24,00016,0008,000

$ millions

32,00024,000

(2,000)(4,000)(6,000)

2011 2010

$ millions

4,0000 2,000(2,000)

2010



95,814



60,182


36,891





334



Retail Banking 12,425,165 11,504,813 920,352 8%


6,524,034

6,855,015

(330,981)

-5%

Treasury 2,392,034

3,097,665

(705,631)

-23%

Insurance Services 5,285,973

5,392,943

(106,970)

-2%


3,873,755

3,575,033

298,722

8%

Other (33,885)

69,112 (102,997)

-149%

30,467,076

30,494,581

(27,505)

-0.1%


2010$’000

2009$’000

2008$’000

2007$’000


Current Income Tax:




3,467,103 3,649,878 3,404,333 2,900,437 2,512,188


Taxation Charge 3,626,965 3,715,327 3,774,200 3,495,038 2,557,161



2010$’000

2009$’000

Gross Loans 101,992,844 97,409,156 93,264,752


IFRS LLP 2,016,405 1,594,659 1,086,441






2010 2011







$ billions

9.7

Q3

10

Q2Q1

20


9.5

Q2

1

Q1Q4Q3

201

9.99.89.7

9.3

Q4Q39.4


Total Assets

ROE (percentage)



Earni

51

316

18.29%

74c2.4

3.47.1

4947

324321

22.06%24.20%



57

38

16.66

85c2.8

75

555351

3632326316

%19.1619.63%18.29%

c8390c74c72.2.92.4

3.3.73.63.47.37.7.57.1

60

32

16.83%

81c2.7

3.67.1

95

3335

%16.66

c872.5

83.27.



IFRS LLP

Non Accrual Loans

Gross Loans

2,251,257

38.35%

1.98%

2,016,405

5,257,217

101,992,844

$’000



2011

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752

$’000

2,093,499

37.83%

1.64%

1,594,659

4,215,254

97,409,156

2009$’000

0201

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752



Current Income Tax:

Profit Before Taxes




197,563

2,691,532

14,417,094$’000

81.18%

4.18%

4,267,662



14,244,620

2010$’0002011



164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

192,037194,427197,563

2,431,6112,681,1032,691,532

13,119,09515,379,65914,417,094

2007$’0002008

$’0002009

$’000

87.50%81.18%

3.79%4.18%

3,688,158

164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

2007

Effective Tax Rate



25.8%

3,715,32765,449

3,649,878

664,33996,444

197,563

25.5%

3,626,965159,862

3,467,103


237,560

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

26.6%24.5%25.8%

3,495,0383,774,2003,715,327594,601369,86765,449

2,900,4373,404,3333,649,878

183,590447,420664,33993,19981,38396,444

192,037194,427197,563

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

Return on equity



Policyholders' Fund



Assets

D

otalT

17.59%

10,618

1

39,020

58,942

144,67099,976

157,018

332,041

$ millons

160,3


2011

20.78%

10,702

53,155

36,891

60,182

145,66495,814

151,896

325,824

$ millons2010

5,392,943

3,097,665

6,855,015

1,504,813

$'000


2,392,034reasuryT



$'00020102011

-2%

-23%

-5%

8%

$'000

(106,970)5,392,943

(705,631)3,097,665

(330,981)6,855,015

920,3521,504,813




148

328

148

334

30,494,581

69,

3,575,033

30,467,076

(33,885)Other

3,873,755ServicesInvestment Management

-0.1%

-149%

8%

(27,505)30,494,581

(102,997)12169,

298,7223,575,033

Total RevenueTotal revenue was $30,467 million in 2011,a decrease of 0.1% or $28 million comparedto the prior year. Revenues from ourinvestment management and retail bankingsegments both increased by 8% this year.The retail loan portfolio recorded growth of10.7% during the year despite thechallenging economic environment andweak consumer loan demand. We alsoincreased our securities trading income, andfee income from our Mutual Fund and UnitTrust business. Corporate & CommercialBanking and Treasury revenues declinedrelative to last year due to lower portfoliovolumes and lower yields on investmentsecurities as market interest rates declinedduring the year.

Net Interest IncomeNet Interest income was $22,429 million in2011, down $739 million from last year. TheGroup’s average earning assets increased by3% to $307,407 million, while the netinterest margin (net interest income as apercentage of average earning assets)declined relative to prior year by 47 basispoints to 7.3%. Year-over-year, weexperienced positive changes in the mix andvolume of the portfolios that impact netinterest margin. The increase in volumescontributed a positive $1,010 million to thechanges in net interest income, however thenegative impact from declining asset yieldsof $1,749 million was more significant. TheJamaica Debt Exchange (JDX) programmeinitiated the reduction in interest rates inFebruary 2010, and there have been furtherreductions in market and lending ratesthroughout 2011.

Other IncomeOther income, defined as all income otherthan interest income, was $8,038 million forthis year, up $712 million over last year. Feeand commission income increased by $646million due to increased retail bankingtransaction volumes and growth in our UnitTrust and Mutual Fund portfolios.

The larger portions of our income camefrom retail banking fees (23%), insurancerevenues (24%), and commercial anddepository fees (17 %), similar to the prioryear.

omeOther Inc

26%

26%

10%

23%

24%

seeail banking fteR

stelaedit rCrorcial and depositCommer


24% 17%

seey f

17%

2011

2010


est Expenses

Other Inc

2011

2010

7,326

8,038

omeOther Inc

0

Salarie

2009

2008

2007

12,0008,0004,000


16,00012,000

$ millions

f benefits

3,0000 1,500

2009

2008

2007

$ millions

5,287

6,334

5,843

9,0007,5006,0004,5003,000

Other MarkT

SysPr




tion


omeest Inct InterNe



2011

2010

2009

2008

2007

14,858

19,354

25,297

23,168

22,429

olume VV

eariancolume V

omet Incseert IntNe

eariance VtaR

ome

0

24,00016,0008,000

$ millions

32,00024,000

(2,000)(4,000)(6,000)

2011 2010

$ millions

4,0000 2,000(2,000)

2010

omeOther Inc

26%

26%

10%

23%

24%

seeail banking fteR



24% 17%

seey f

17%

2011

2010


est Expenses

Other Inc

2011

2010

7,326

8,038

omeOther Inc

0

Salarie

2009

2008

2007

12,0008,0004,000


16,00012,000

$ millions

f benefits

3,0000 1,500

2009

2008

2007

$ millions

5,287

6,334

5,843

9,0007,5006,0004,5003,000

Other MarkT

SysPr




tion


omeest Inct InterNe



2011

2010

2009

2008

2007

14,858

19,354

25,297

23,168

22,429

olume VV

eariancolume V

omet Incseert IntNe

eariance VtaR

ome

0

24,00016,0008,000

$ millions

32,00024,000

(2,000)(4,000)(6,000)

2011 2010

$ millions

4,0000 2,000(2,000)

2010

omeOther Inc

26%

26%

10%

23%

24%

seeail banking fteR



24% 17%

seey f

17%

2011

2010


est Expenses

Other Inc

2011

2010

7,326

8,038

omeOther Inc

0

Salarie

2009

2008

2007

12,0008,0004,000


16,00012,000

$ millions

f benefits

3,0000 1,500

2009

2008

2007

$ millions

5,287

6,334

5,843

9,0007,5006,0004,5003,000

Other MarkT

SysPr




tion


omeest Inct InterNe



2011

2010

2009

2008

2007

14,858

19,354

25,297

23,168

22,429

olume VV

eariancolume V

omet Incseert IntNe

eariance VtaR

ome

0

24,00016,0008,000

$ millions

32,00024,000

(2,000)(4,000)(6,000)

2011 2010

$ millions

4,0000 2,000(2,000)

2010


omeOther Inc

26%

26%

10%

23%

24%

seeail banking fteR



24% 17%

seey f

17%

2011

2010


est Expenses

Other Inc

2011

2010

7,326

8,038

omeOther Inc

0

Salarie

2009

2008

2007

12,0008,0004,000


16,00012,000

$ millions

f benefits

3,0000 1,500

2009

2008

2007

$ millions

5,287

6,334

5,843

9,0007,5006,0004,5003,000

Other MarkT

SysPr




tion


omeest Inct InterNe



2011

2010

2009

2008

2007

14,858

19,354

25,297

23,168

22,429

olume VV

eariancolume V

omet Incseert IntNe

eariance VtaR

ome

0

24,00016,0008,000

$ millions

32,00024,000

(2,000)(4,000)(6,000)

2011 2010

$ millions

4,0000 2,000(2,000)

2010




95,814



60,182


36,891





334



Retail Banking 12,425,165 11,504,813 920,352 8%


6,524,034 6,855,015

(330,981)

-5%

Treasury 2,392,034 3,097,665

(705,631)

-23%


(106,970)

-2%

3,873,755 3,575,033

298,722

8%

Other (33,885)

69,112 (102,997)

-149%

30,467,076 30,494,581

(27,505)

-0.1%


2010$’000

2009$’000

2008$’000

2007$’000


Current Income Tax:




3,467,103 3,649,878 3,404,333 2,900,437 2,512,188


Taxation Charge 3,626,965 3,715,327 3,774,200 3,495,038 2,557,161



2010$’000

2009$’000

Gross Loans 101,992,844 97,409,156 93,264,752


IFRS LLP 2,016,405 1,594,659 1,086,441






2010 2011







$ billions

9.7

Q3

10

Q2Q1

20


9.5

Q2

1

Q1Q4Q3

201

9.99.89.7

9.3

Q4Q39.4


Total Assets

ROE (percentage)



Earni

51

316

18.29%

74c2.4

3.47.1

4947

324321

22.06%24.20%



57

38

16.66

85c2.8

75

555351

3632326316

%19.1619.63%18.29%

c8390c74c72.2.92.4

3.3.73.63.47.37.7.57.1

60

32

16.83%

81c2.7

3.67.1

95

3335

%16.66

c872.5

83.27.



IFRS LLP

Non Accrual Loans

Gross Loans

2,251,257

38.35%

1.98%

2,016,405

5,257,217

101,992,844

$’000



2011

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752

$’000

2,093,499

37.83%

1.64%

1,594,659

4,215,254

97,409,156

2009$’000

0201

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752



Current Income Tax:

Profit Before Taxes




197,563

2,691,532

14,417,094$’000

81.18%

4.18%

4,267,662



14,244,620

2010$’0002011



164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

192,037194,427197,563

2,431,6112,681,1032,691,532

13,119,09515,379,65914,417,094

2007$’0002008

$’0002009

$’000

87.50%81.18%

3.79%4.18%

3,688,158

164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

2007

Effective Tax Rate



25.8%

3,715,32765,449

3,649,878

664,33996,444

197,563

25.5%

3,626,965159,862

3,467,103


237,560

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

26.6%24.5%25.8%

3,495,0383,774,2003,715,327594,601369,86765,449

2,900,4373,404,3333,649,878

183,590447,420664,33993,19981,38396,444

192,037194,427197,563

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

Return on equity



Policyholders' Fund



Assets

D

otalT

17.59%

10,618

1

39,020

58,942

144,67099,976

157,018

332,041

$ millons

160,3


2011

20.78%

10,702

53,155

36,891

60,182

145,66495,814

151,896

325,824

$ millons2010

5,392,943

3,097,665

6,855,015

1,504,813

$'000


2,392,034reasuryT



$'00020102011

-2%

-23%

-5%

8%

$'000

(106,970)5,392,943

(705,631)3,097,665

(330,981)6,855,015

920,3521,504,813




148

328

148

334

30,494,581

69,


30,467,076

(33,885)Other

3,873,755

-0.1%

-149%

8%

(27,505)30,494,581

(102,997)12169,

298,7223,575,033

Non-Interest Expenses Non-Interest expenses for the year totalled $14,837 million, up $358 millionor 2.5% over last year. The growth in expenses was contained below theinflation rate of 6% due to our heightened focus on expense management andinitiatives implemented to improve operating efficiencies. During the year, wecontinued to consolidate support functions and rationalize our network. Weclosed the Victoria and Blake branch, and consolidated some of our ScotiaInvestments offices.

Our salaries and employee benefits costs, the largest component of ourexpenses, were $8,294 million, up $600 million or 7.8% over last year. Thiswas mainly due to a contractual salary increase of 11% at the start of thefinancial year. Marketing and advertising expenses increased by $125 millionto $629 million due to increased promotional activities, as we launched newproducts during the year. Property expenses including depreciation totalled$1,970 million, up $88 million or 4.8% over last year.

In contrast, other expenses declined by $435 million as a result of efficiencygains being achieved through leveraging our infrastructure to provide serviceswithin the Caribbean; reduction in professional fees; as well as the effectiveimplementation of measures to address losses from card skimming.

Our productivity ratio, operating expense as a percentage of total revenue,was 53.20%, compared with 52.72% in 2010. The decline in productivity in2011 is attributable to the net effect of the decline in total revenues coupledwith the increased operating costs.

34

38

46

60

0 20 40 60$ billions

2007

2008

2009

2010

2011

Shareholders' Equity

53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011

Dividend Payout Ratio

2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011

Impairment Losses on Loans

1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity Ratio

omeOther Inc

26%

26%

10%

23%

24%

seeail banking fteR



24% 17%

seey f

17%

2011

2010


est Expenses

Other Inc

2011

2010

7,326

8,038

omeOther Inc

0

Salarie

2009

2008

2007

12,0008,0004,000


16,00012,000

$ millions

f benefits

3,0000 1,500

2009

2008

2007

$ millions

5,287

6,334

5,843

9,0007,5006,0004,5003,000

Other MarkT

SysPr




tion


omeest Inct InterNe



2011

2010

2009

2008

2007

14,858

19,354

25,297

23,168

22,429

olume VV

eariancolume V

omet Incseert IntNe

eariance VtaR

ome

0

24,00016,0008,000

$ millions

32,00024,000

(2,000)(4,000)(6,000)

2011 2010

$ millions

4,0000 2,000(2,000)

2010

TaxesIn 2011, the provision for current income and deferred taxes was $3,627 million,down $88 million or 2.3% from last year. Current year income tax decreased overthe prior year, mainly due to the decrease in the investment income tax paid byScotia Insurance. The Group’s overall effective tax rate was 25.5%, down slightlyfrom last year.

Taxation Charge





95,814



60,182


36,891





334



Retail Banking 12,425,165 11,504,813 920,352 8%


6,524,034 6,855,015

(330,981)

-5%

Treasury 2,392,034 3,097,665

(705,631)

-23%


(106,970)

-2%

3,873,755 3,575,033

298,722

8%

Other (33,885)

69,112 (102,997)

-149%

30,467,076 30,494,581

(27,505)

-0.1%


2010$’000

2009$’000

2008$’000

2007$’000


Current Income Tax:




3,467,103 3,649,878 3,404,333 2,900,437 2,512,188


Taxation Charge 3,626,965 3,715,327 3,774,200 3,495,038 2,557,161



2010$’000

2009$’000

Gross Loans 101,992,844 97,409,156 93,264,752


IFRS LLP 2,016,405 1,594,659 1,086,441






2010 2011







$ billions

9.7

Q3

10

Q2Q1

20


9.5

Q2

1

Q1Q4Q3

201

9.99.89.7

9.3

Q4Q39.4


Total Assets

ROE (percentage)



Earni

51

316

18.29%

74c2.4

3.47.1

4947

324321

22.06%24.20%



57

38

16.66

85c2.8

75

555351

3632326316

%19.1619.63%18.29%

c8390c74c72.2.92.4

3.3.73.63.47.37.7.57.1

60

32

16.83%

81c2.7

3.67.1

95

3335

%16.66

c872.5

83.27.



IFRS LLP

Non Accrual Loans

Gross Loans

2,251,257

38.35%

1.98%

2,016,405

5,257,217

101,992,844

$’000



2011

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752

$’000

2,093,499

37.83%

1.64%

1,594,659

4,215,254

97,409,156

2009$’000

0201

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752



Current Income Tax:

Profit Before Taxes




197,563

2,691,532

14,417,094$’000

81.18%

4.18%

4,267,662



14,244,620

2010$’0002011



164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

192,037194,427197,563

2,431,6112,681,1032,691,532

13,119,09515,379,65914,417,094

2007$’0002008

$’0002009

$’000

87.50%81.18%

3.79%4.18%

3,688,158

164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

2007

Effective Tax Rate



25.8%

3,715,32765,449

3,649,878

664,33996,444

197,563

25.5%

3,626,965159,862

3,467,103


237,560

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

26.6%24.5%25.8%

3,495,0383,774,2003,715,327594,601369,86765,449

2,900,4373,404,3333,649,878

183,590447,420664,33993,19981,38396,444

192,037194,427197,563

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

Return on equity



Policyholders' Fund



Assets

D

otalT

17.59%

10,618

1

39,020

58,942

144,67099,976

157,018

332,041

$ millons

160,3


2011

20.78%

10,702

53,155

36,891

60,182

145,66495,814

151,896

325,824

$ millons2010

5,392,943

3,097,665

6,855,015

1,504,813

$'000


2,392,034reasuryT



$'00020102011

-2%

-23%

-5%

8%

$'000

(106,970)5,392,943

(705,631)3,097,665

(330,981)6,855,015

920,3521,504,813




148

328

148

334

30,494,581

69,


30,467,076

(33,885)Other

3,873,755

-0.1%

-149%

8%

(27,505)30,494,581

(102,997)12169,

298,7223,575,033




95,814



60,182


36,891





334



Retail Banking 12,425,165 11,504,813 920,352 8%


6,524,034 6,855,015

(330,981)

-5%

Treasury 2,392,034 3,097,665

(705,631)

-23%


(106,970)

-2%

3,873,755 3,575,033

298,722

8%

Other (33,885)

69,112 (102,997)

-149%

30,467,076 30,494,581

(27,505)

-0.1%


2010$’000

2009$’000

2008$’000

2007$’000


Current Income Tax:




3,467,103 3,649,878 3,404,333 2,900,437 2,512,188


Taxation Charge 3,626,965 3,715,327 3,774,200 3,495,038 2,557,161



2010$’000

2009$’000

Gross Loans 101,992,844 97,409,156 93,264,752


IFRS LLP 2,016,405 1,594,659 1,086,441






2010 2011







$ billions

9.7

Q3

10

Q2Q1

20


9.5

Q2

1

Q1Q4Q3

201

9.99.89.7

9.3

Q4Q39.4


Total Assets

ROE (percentage)



Earni

51

316

18.29%

74c2.4

3.47.1

4947

324321

22.06%24.20%



57

38

16.66

85c2.8

75

555351

3632326316

%19.1619.63%18.29%

c8390c74c72.2.92.4

3.3.73.63.47.37.7.57.1

60

32

16.83%

81c2.7

3.67.1

95

3335

%16.66

c872.5

83.27.



IFRS LLP

Non Accrual Loans

Gross Loans

2,251,257

38.35%

1.98%

2,016,405

5,257,217

101,992,844

$’000



2011

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752

$’000

2,093,499

37.83%

1.64%

1,594,659

4,215,254

97,409,156

2009$’000

0201

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752



Current Income Tax:

Profit Before Taxes




197,563

2,691,532

14,417,094$’000

81.18%

4.18%

4,267,662



14,244,620

2010$’0002011



164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

192,037194,427197,563

2,431,6112,681,1032,691,532

13,119,09515,379,65914,417,094

2007$’0002008

$’0002009

$’000

87.50%81.18%

3.79%4.18%

3,688,158

164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

2007

Effective Tax Rate



25.8%

3,715,32765,449

3,649,878

664,33996,444

197,563

25.5%

3,626,965159,862

3,467,103


237,560

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

26.6%24.5%25.8%

3,495,0383,774,2003,715,327594,601369,86765,449

2,900,4373,404,3333,649,878

183,590447,420664,33993,19981,38396,444

192,037194,427197,563

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

Return on equity



Policyholders' Fund



Assets

D

otalT

17.59%

10,618

1

39,020

58,942

144,67099,976

157,018

332,041

$ millons

160,3


2011

20.78%

10,702

53,155

36,891

60,182

145,66495,814

151,896

325,824

$ millons2010

5,392,943

3,097,665

6,855,015

1,504,813

$'000


2,392,034reasuryT



$'00020102011

-2%

-23%

-5%

8%

$'000

(106,970)5,392,943

(705,631)3,097,665

(330,981)6,855,015

920,3521,504,813




148

328

148

334

30,494,581

69,


30,467,076

(33,885)Other

3,873,755

-0.1%

-149%

8%

(27,505)30,494,581

(102,997)12169,

298,7223,575,033


34

38

46

60


2007

2008

2009

2010

2011


53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011


2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011


1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity RatioCredit QualityNon-performing loans (NALs) as at October 31, 2011 totalled $5,257 million(2010: $4,215), representing 5.2% (2010: 4.33%) of total loans and 1.6% (2010:1.3%) of total assets. The increase in NALs in 2011 was due primarily to theclassification of a large commercial loan as non-performing in the last quarter ofthe year. Commercial NALs now represent 2.66% of total loans, compared to1.71% last year. Retail NALs on the other hand, now represent 2.50% of total loans,a decrease from 2.62% last year, as the quality of this portfolio improved.

Loan losses expensed for the year were $1,385 million, down $213 million or 13%from last year. This reflects a 3.34% decline in provisions provided during the year,particularly on the retail portfolio; coupled with a 17.43% increase in recoveries aswe stepped up our collections efforts during the year.

34

38

46

60


2007

2008

2009

2010

2011


53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011


2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011


1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity Ratio

The total allowance for loan losses reflects the higher of IFRS provisions and theRegulatory provisions. Changes in the IFRS provisions are charged to the incomestatement, while Regulatory provision requirements in excess of the IFRS provisionare credited to a non-distributable loan loss reserve. The table below shows theIFRS and Regulatory provisions for the past three years.

The increases in NALs and loan loss provisions are a reflection of the continueddifficulties being faced by our borrowers in the current challenging businessenvironment, particularly in the tourism sector. Against this background, wecontinued to enhance our loan underwriting policies, and tightly manage our past-due loans throughout the year. The debt-management strategy pursued by theGovernment has resulted in a lower and more stable interest rate environment,however the growth signals for our economy remain weak and recovery will beslow. We continue to take pro-active steps to work with our customers that areexperiencing challenges, to mitigate the impact on the quality of the Group’s loanportfolio.




95,814



60,182


36,891





334



Retail Banking 12,425,165 11,504,813 920,352 8%


6,524,034 6,855,015

(330,981)

-5%

Treasury 2,392,034 3,097,665

(705,631)

-23%


(106,970)

-2%

3,873,755 3,575,033

298,722

8%

Other (33,885)

69,112 (102,997)

-149%

30,467,076 30,494,581

(27,505)

-0.1%


2010$’000

2009$’000

2008$’000

2007$’000


Current Income Tax:




3,467,103 3,649,878 3,404,333 2,900,437 2,512,188


Taxation Charge 3,626,965 3,715,327 3,774,200 3,495,038 2,557,161



2010$’000

2009$’000

Gross Loans 101,992,844 97,409,156 93,264,752


IFRS LLP 2,016,405 1,594,659 1,086,441






2010 2011







$ billions

9.7

Q3

10

Q2Q1

20


9.5

Q2

1

Q1Q4Q3

201

9.99.89.7

9.3

Q4Q39.4


Total Assets

ROE (percentage)



Earni

51

316

18.29%

74c2.4

3.47.1

4947

324321

22.06%24.20%



57

38

16.66

85c2.8

75

%

555351

3632326316

%18.95% % 18.9519.1619.63%18.29%

c8390c74c72.2.92.4

3.3.73.63.47.37.7.57.1

60

32

16.83%

81c2.7

3.67.1

95

3335

%16.66

c872.5

83.27.



IFRS LLP

Non Accrual Loans

Gross Loans

2,251,257

38.35%

1.98%

2,016,405

5,257,217

101,992,844

$’000



2011

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752

$’000

2,093,499

37.83%

1.64%

1,594,659

4,215,254

97,409,156

2009$’000

0201

1,715,750

30.29%

1.16%

1,086,441

3,587,030

93,264,752



Current Income Tax:

Profit Before Taxes




197,563

2,691,532

14,417,094$’000

81.18%

4.18%

4,267,662



14,244,620

2010$’0002011



164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

192,037194,427197,563

2,431,6112,681,1032,691,532

13,119,09515,379,65914,417,094

2007$’0002008

$’0002009

$’000

87.50%81.18%

3.79%4.18%

3,688,158

164,227

2,143,822

10,167,221

$’000

78.12%

3.00%

2,802,191

2007

Effective Tax Rate



25.8%

3,715,32765,449

3,649,878

664,33996,444

197,563

25.5%

3,626,965159,862

3,467,103


237,560

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

26.6%24.5%25.8%

3,495,0383,774,2003,715,327594,601369,86765,449

2,900,4373,404,3333,649,878

183,590447,420664,33993,19981,38396,444

192,037194,427197,563

25.2%

2,557,16144,973

2,512,188

122,91381,226

164,227

Return on equity



Policyholders' Fund



Assets

D

otalT

17.59%

10,618

1

39,020

58,942

144,67099,976

157,018

332,041

$ millons

160,3


2011

20.78%

10,702

53,155

36,891

60,182

145,66495,814

151,896

325,824

$ millons2010

5,392,943

3,097,665

6,855,015

1,504,813

$'000


2,392,034reasuryT



$'00020102011

-2%

-23%

-5%

8%

$'000

(106,970)5,392,943

(705,631)3,097,665

(330,981)6,855,015

920,3521,504,813




148

328

148

334

30,494,581

69,


30,467,076

(33,885)Other

3,873,755

-0.1%

-149%

8%

(27,505)30,494,581

(102,997)12169,

298,7223,575,033

34

38

46

60


2007

2008

2009

2010

2011


53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011


2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011


1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity Ratio

0 40 60 120 160 200

Deposit Portfolio

BanksBusiness and GovernmentPersonal

27

31

34

37

39

0 10 20 30 40

Policyholders' Fund

0 20 40 60 80

Repurchase Agreements,Capital Management and

Government Securities Funds

6

6

8

15

25

0 5 15 20 25

$ billions

$ billions $ billions

$ billions

$ billions


2007*

2008

2009

2010

2011

2007*

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

Managed Funds(Unit Trust and Mutual Funds)

0 40 80 120 160

Cash Resources

Securities

Loans

Other Assets

Total Assets

400 80 120 160

Deposits

Securities sold under Repurchase Agreements& other Client Obligations

Policy Holders' Fund

Other Liabilities

Total Liabilities

55

62

60

59

46

2011 2010

Repurchase Agreements

Capital Management and Government Securities Funds

2011 2010

138

140

152

157

155

0 20 40 60 80 100

Loan Portfolio

Residential mortgages

Business and Government Personal and credit cards

2007

2008

2009

2010

2011

76

89

92

96

100

0 40 60 120 160 200

Deposit Portfolio


27

31

34

37

39

0 10 20 30 40

Policyholders' Fund

0 20 40 60 80



6

6

8

15

25

0 5 15 20 25

$ billions


$ billions

$ billions


2007*

2008

2009

2010

2011

2007*

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011


0 40 80 120 160

Cash Resources

Securities

Loans

Other Assets

Total Assets

400 80 120 160

Deposits



Other Liabilities

Total Liabilities

55

62

60

59

46

2011 2010



2011 2010

138

140

152

157

155

0 20 40 60 80 100

Loan Portfolio



2007

2008

2009

2010

2011

76

89

92

96

100

34

38

46

60


2007

2008

2009

2010

2011


53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011


2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011


1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity Ratio


Summary of Quarterly Results Scotia Group experienced four quarters of strongperformance during a time of continued sluggish growth inthe economy. Since February 2010 after the successfulcompletion of the JDX, market interest rates have declined tohistorical lows. Net income has been relatively stable

throughout the year, having peaked in the second quarter.Operating expenses have been carefully managed anddeclined in the last quarter. Our return on equity (ROE)however, has been declining in line with the decline inbenchmark interest rates.

GROUP FINANCIAL CONDITION

AssetsThe Group’s total assets increased year-over-year by $6billion or 2% to $332 billion as at October 31, 2011. Growthtook place primarily in the investment securities and loanportfolios held by the Group.

Cash ResourcesOur cash resources held to meet statutory reserves and theGroup’s prudential liquidity targets stood at $53 billion (2010:$57 billion). During the year, we maintained adequateliquidity levels to enable us to respond effectively to changesin our cash flow positions.

SecuritiesTotal investment securities, including pledged assets,increased from $152 billion to $157 billion. Pledged assets,mainly relating to securities sold under repurchase

agreements and the capital management accounts, nowstands at $65 billion, compared to $64 billion last year. Otherinvestments increased by $2 billion to $90 billion at October31, 2011. This is mainly attributable to growth inPolicyholders’ Fund for Scotia Insurance.

LoansOur loan portfolio grew by 4% this year, with loans, afterallowance for impairment losses, growing to just under $100billion. Our Building Society recorded a $2.7 billion or 36%growth in the Residential Mortgage portfolio year-over-year.Growth in our personal and credit card loan portfolio wasalso significant; however this was offset by a decline inforeign currency commercial loans.

Policyholders’ FundThe Policyholders’ Fund reflects theinsurance contract liabilities held at ScotiaInsurance for our flagship productScotiaMINT. The Fund increased to $39billion, an increase of $2 billion or 6% over2010. This was due to strong salesperformance, resulting in an increase ingross premium income of 9.8% year-over-year.



0 40 60 120 160 200

Deposit Portfolio


27

31

34

37

39

0 10 20 30 40

Policyholders' Fund

0 20 40 60 80



6

6

8

15

25

0 5 15 20 25

$ billions


$ billions

$ billions


2007*

2008

2009

2010

2011

2007*

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011


0 40 80 120 160

Cash Resources

Securities

Loans

Other Assets

Total Assets

400 80 120 160

Deposits



Other Liabilities

Total Liabilities

55

62

60

59

46

2011 2010



2011 2010

138

140

152

157

155

0 20 40 60 80 100

Loan Portfolio



2007

2008

2009

2010

2011

76

89

92

96

100

0 40 60 120 160 200

Deposit Portfolio


27

31

34

37

39

0 10 20 30 40

Policyholders' Fund

45

55

0 20 40 60 80



6

6

8

15

25

0 5 15 20 25

$ billions


$ billions

$ billions


2007*

2008

2009

2010

2011

2007*

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011


0 40 80 120 160

Cash Resources

Securities

Loans

Other Assets

Total Assets

400 80 120 160

Deposits



Other Liabilities

Total Liabilities

55

62

60

59

46

2011 2010



2011 2010

138

140

152

157

155

0 20 40 60 80 100

Loan Portfolio



2007

2008

2009

2010

2011

76

89

92

96

100

0 40 60 120 160 200

Deposit Portfolio


27

31

34

37

39

0 10 20 30 40

Policyholders' Fund

0 20 40 60 80



6

6

8

15

25

0 5 15 20 25

$ billions


$ billions

$ billions


2007*

2008

2009

2010

2011

2007*

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011


0 40 80 120 160

Cash Resources

Securities

Loans

Other Assets

Total Assets

400 80 120 160

Deposits



Other Liabilities

Total Liabilities

55

62

60

59

46

2011 2010



2011 2010

138

140

152

157

155

0 20 40 60 80 100

Loan Portfolio



2007

2008

2009

2010

2011

76

89

92

96

100

0 40 60 120 160 200

Deposit Portfolio


27

31

34

37

39

0 10 20 30 40

Policyholders' Fund

0 20 40 60 80



6

6

8

15

25

0 5 15 20 25

$ billions


$ billions

$ billions


2007*

2008

2009

2010

2011

2007*

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011


0 40 80 120 160

Cash Resources

Securities

Loans

Other Assets

Total Assets

400 80 120 160

Deposits



Other Liabilities

Total Liabilities

55

62

60

59

46

2011 2010



2011 2010

138

140

152

157

155

0 20 40 60 80 100

Loan Portfolio



2007

2008

2009

2010

2011

76

89

92

96

100

Obligations related to repurchaseagreements, capital management andgovernment securities fundsThese represent funds invested by clientsof Scotia Investments. These obligationsfell slightly to $59 billion, in keeping withour strategy to transition to an off-balancesheet funds management business modelin Scotia Investments. We haveexperienced exponential growth in ourMutual Fund and Unit Trust business, withfunds under management growing by $10billion, exceeding our expectations.

Deposits Deposits declined to $155 billion, down $2billion from the previous year. The majorarea of decline was in Business andGovernment deposit balances, which tendto fluctuate based on cash flow needs andcash management generally. Our retailbase of core deposits remain strongreflecting the confidence felt by ourcustomers in Scotiabank, especially withthe uncertainty caused by the volatility inthe local and global markets.

LiabilitiesTotal liabilities were $269 billion as atOctober 31, 2011, a decrease of $1 billionor 1% from last year.


34

38

46

60


2007

2008

2009

2010

2011


53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011


2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011


1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity Ratio

34

38

46

60


2007

2008

2009

2010

2011


53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011


2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011


1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity Ratio

Regulatory Requirement Excess over Regulatory Requirement Capital Adequacy Ratio

Banking and Building Society 10.0%

Investment Management 10.0%

Life Insurance* 150.0%

5.8%

37.8%

737.0%

15.8%

47.8%

887.0%

* Minimum Continuing Capital on Surplus Ratio

Total Shareholders’ return 29% 15% 9% 21% 7% 2%Benchmarks:

JSE Index 8% 5% 5% 14% 1% 2%

JSE Select Index 46% 10% 15% 38% 5% 3%

Share Price MovementsDividends Reinvested

FINANCIAL PERFORMANCERETAIL BANKING

2011 2010$ millions $ millions

Revenues 12,425 11,504 Expenses (9,083) (9,159) Profit before taxes 3,342 2,345

FINANCIAL PERFORMANCECORPORATE AND COMMERCIAL BANKING



FINANCIAL PERFORMANCETREASURY


Revenues 2,392 3,098 Expenses (69) (64) Profit before taxes 2,323 3,034

FINANCIAL PERFORMANCEINVESTMENT MANAGEMENT SERVICES



FINANCIAL PERFORMANCEINSURANCE SERVICES



Over 1 Year Over 3 Years Over 5 Years Over 1 Year Over 3 Years Over 5 Years

Banking and Building Society

10.0%

Excess over Regulatory Requirement


Regulatory Requirement

15.8%

Capital Adequacy Ratio

5.8%


15.8%


JSE Select Index

JSE Index

Benchmarks:Total Shareholders’ return

Life Insurance*

Investment Management

10%

5%

15%

150.0%

10.0%

46%

8%

29%Total Shareholders’ return

Dividends Reinvested

Over 3 YearsOver 1 Year

5%

1%

7%

887.0%

47.8%

38%15%

14%5%

21%9%

737.0%

37.8%

Share Price Movements

Over 3 YearsOver 1 YearOver 5 Years

3%

2%

2%

887.0%

47.8%


Over 5 Years

Revenues

BANKINGLREFINANCIA

1,504

$ millions

112,425

$ millions20101120

PERFORMANCE

1,504

$ millions2010

Revenues

CORPORATE AND COMMERCIALFINANCIA

6,524

$ millions1120

BANKINGCORPORATE AND COMMERCIAL PERFORMANCELFINANCIA

6,855

$ millions$ millions2010

BANKING

Profit before taxes

Expenses

TREASURYFINANCIA

(9,159)

Profit before taxes

(9,083)

PERFORMANCE

(9,159)

Profit before taxes

Expenses

INVESTMENT MANAGEMENT SERVICESFINANCIA

(4,758)

Profit before taxes

INVESTMENT MANAGEMENT SERVICES PERFORMANCELFINANCIA

(4,457)

INVESTMENT MANAGEMENT SERVICES

Profit before taxes

Expenses

Revenues

(69)

3,098

$ millions

Profit before taxes

2,392

$ millions20101120

(64)

3,098

$ millions2010

Profit before taxes

Expenses

Revenues

(1,227)

3,874

$ millions

Profit before taxes

1120

(1,239)

3,575


Profit before taxes

Expenses

Revenues

INSURANCE SERVICESFINANCIA

(925)

5,393

$ millions

Profit before taxes

(957)

5,286

$ millions20101120

INSURANCE SERVICES PERFORMANCE

(925)

5,393

$ millions2010

4,4684,329

0 40 60 120 160 200

Deposit Portfolio


27

31

34

37

39

0 10 20 30 40

Policyholders' Fund

0 20 40 60 80



6

6

8

15

25

0 5 15 20 25

$ billions


$ billions

$ billions


2007*

2008

2009

2010

2011

2007*

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011


0 40 80 120 160

Cash Resources

Securities

Loans

Other Assets

Total Assets

400 80 120 160

Deposits



Other Liabilities

Total Liabilities

55

62

60

59

46

2011 2010



2011 2010

138

140

152

157

155

0 20 40 60 80 100

Loan Portfolio



2007

2008

2009

2010

2011

76

89

92

96

100Shareholders’ Equity Scotia Group maintains a strong capital base to support the risksassociated with its diversified businesses. This base contributes tosafety for the Group’s customers, and fosters investor confidence, whileallowing the Group to take advantage of growth opportunities that mayarise.

Total shareholders’ equity rose to $60 billion in 2011, $7 billion morethan prior year fuelled by internally generated capital. Our risk basedcapital adequacy ratios, a measure of the Group's overall strength,continues to exceed the regulatory requirements and remain among thehighest of its peer group.

34

38

46

60


2007

2008

2009

2010

2011


53

1.19

1.30

1.39

1.48

0.00 0.40 0.80 1.20 1.60

$

%

%%

%

2007

2008

2009

2010

2011

Dividend per Share

1.48

47.26

43.07

38.78

44.26

45.18

0 20 40 60

2007

2008

2009

2010

2011


2.85

3.35

3.53

3.19

3.07

0.0 1.0 2.0 3.0 4.0

2007

2008

2009

2010

2011

Return on Assets

526

759

1,873

1,598

1,385

0 500 1,000 1,500 2,000

$ millions

2007

2008

2009

2010

2011


1.82

3.28

3.85

4.33

5.15

0.0 1.0 2.0 3.0 4.0 5.0 6.0

2007

2008

2009

2010

2011

NAL as a % of Loans

49.53

48.93

50.61

52.72

53.20

0 10 20 30 40 50 60

2007

2008

2009

2010

2011

Productivity Ratio

Shareholders’ ReturnOur total shareholder return (including both dividends andchange in price of the Group’s common shares) increasedsubstantially over the prior year to 29%. This comparesfavourably with returns on other listed companies on the JSE

Index, which grew by 8%. Share prices for the blue chipfinancial services stocks have generally increased year-over-year, resulting in the JSE Select Index return of 46%.

Shareholders continued to receive quarterlydividends, which totalled $1.48 per share forthis year. We remain focused on achievingsustainable, long-term earnings growth andstable dividend income streams to ourshareholders. The dividend payout ratio for2011 was 45.18% compared to 44.26% lastyear.





5.8%

37.8%

737.0%

15.8%

47.8%

887.0%



JSE Index 8% 5% 5% 14% 1% 2%

JSE Select Index 46% 10% 15% 38% 5% 3%



















10.0%




15.8%


5.8%


15.8%


JSE Select Index

JSE Index


Life Insurance*


10%

5%

15%

150.0%

10.0%

46%

8%




5%

1%

7%

887.0%

47.8%

38%15%

14%5%

21%9%

737.0%

37.8%



3%

2%

2%

887.0%

47.8%


Over 5 Years

Revenues

BANKINGLREFINANCIA

1,504

$ millions

112,425

$ millions20101120

PERFORMANCE

1,504

$ millions2010

Revenues


6,524

$ millions1120


6,855


BANKING

Profit before taxes

Expenses

TREASURYFINANCIA

(9,159)

Profit before taxes

(9,083)

PERFORMANCE

(9,159)

Profit before taxes

Expenses


(4,758)

Profit before taxes


(4,457)


Profit before taxes

Expenses

Revenues

(69)

3,098

$ millions

Profit before taxes

2,392

$ millions20101120

(64)

3,098

$ millions2010

Profit before taxes

Expenses

Revenues

(1,227)

3,874

$ millions

Profit before taxes

1120

(1,239)

3,575


Profit before taxes

Expenses

Revenues


(925)

5,393

$ millions

Profit before taxes

(957)

5,286

$ millions20101120


(925)

5,393

$ millions2010

4,4684,329



Overview of Business Lines

RETAIL BANKING

DEEPENING ROOTS WITH INNOVATION

The Retail Banking Division deepened its roots in the marketplace in 2011 with a slate of innovative strategies thatpromoted growth in both our loan and deposit portfolios, andcontributed some $12 billion to the Group’s revenues.

We continued to seek new and convenient ways of deliveringour products and services to our customers in order toimprove their financial well-being; and we also made inroadsin untapped and underserved segments of the market.

A 20% increase in auto loans was recorded this year,attributable to our long-standing relationship with the newcar industry and our more recent alliance with the JamaicaUsed Car Dealers Association. Strategic partnerships werealso formed with organisations whose members benefitedfrom preferential terms on Scotia Plan Loans and mortgages.We also launched “Open for Business” with special lendingrates and incentives to assist our retail and small businesscustomers to meet their financial needs. Quarterly direct mailoffers to targeted customers supported our drive to deliverconvenient, hassle-free banking solutions.

Scotiabank further streamlined efficiencies across the branchnetwork during 2011, with the establishment of a LendingServices Unit which now manages administrative andprocessing functions. This has allowed Banking Officers moretime with customers, and has also facilitated greater speedand efficiency in the turnaround time for loan applications.

Optimizing Service ChannelsThe Bank expanded its off-site services with the installationof Automated Banking Machines (ABMs) at seven newlocations islandwide. Eighty-one older machines were alsoreplaced and 32 were upgraded. The new ABMs boastspecial anti-skimming features to protect customers againstfraud.

Usage of the Internet Banking and Mobile Banking servicesincreased during the year and several enhanced featureswere introduced on these channels, as we sought to providea comprehensive, user-friendly banking experience. Thesefeatures include third-party transfers and cross currency

capabilities and customers using our new Mobile Application(APP) can now locate branches and ABMs, sign in to mobilebanking and access foreign exchange rates.

Our credit card portfolio was expanded during the yearunder review with the addition of the Scotia Aero PlatinumMasterCard®, which provides premium cardholders withunparalleled travel rewards. Cardholders also benefited fromthe “More for You” Merchant Partner programme whichguaranteed discounts of up to 50% at specific merchants.

At year-end, the Bank won the coveted award of Top MagnaRewards Partner for 2011.

Strengthening Our Offering We will continue to deepen our presence in select markets inan effort to further grow market share in key product lines in2012; while also improving our service delivery acrossmultiple channels. Among our priorities is the introduction ofa new suite of deposit products designed to promoteconsistent savings and assist customers in managing theirfunds and banking costs more effectively. We will furtherexpand our ABM network, and add new functionalities andservices on our Internet, and Mobile Banking channels as weseek to enhance the customer experience.





5.8%

37.8%

737.0%

15.8%

47.8%

887.0%



JSE Index 8% 5% 5% 14% 1% 2%

JSE Select Index 46% 10% 15% 38% 5% 3%



















10.0%




15.8%


5.8%


15.8%


JSE Select Index

JSE Index


Life Insurance*


10%

5%

15%

150.0%

10.0%

46%

8%




5%

1%

7%

887.0%

47.8%

38%15%

14%5%

21%9%

737.0%

37.8%



3%

2%

2%

887.0%

47.8%


Over 5 Years

Revenues

BANKINGLAITTAIRE PERFORMANCELL PERFORMANCEFINANCIA

1,504

$ millions

112,425

$ millions20101120

PERFORMANCE

1,504

$ millions2010

Revenues


6,524

$ millions1120


6,855


BANKING

Profit before taxes

Expenses

TREASURYFINANCIA

2,3452,345

(9,159)

3,3423,342Profit before taxes

(9,083)

PERFORMANCE

2,3452,345

(9,159)

Profit before taxes

Expenses


(4,758)

Profit before taxes


(4,457)


Profit before taxes

Expenses

Revenues

(69)

3,098

$ millions

Profit before taxes

2,392

$ millions20101120

(64)

3,098

$ millions2010

Profit before taxes

Expenses

Revenues

(1,227)

3,874

$ millions

Profit before taxes

1120

(1,239)

3,575


Profit before taxes

Expenses

Revenues


(925)

5,393

$ millions

Profit before taxes

(957)

5,286

$ millions20101120


(925)

5,393

$ millions2010

4,4684,329

SMALL & MEDIUM BUSINESS BANKING

Promoting Sustained SME Development

Ongoing capacity-building initiatives amongentrepreneurs and the strengthening ofalliances across the sector provided themomentum for a 31% growth in the Small &Medium Enterprise Unit’s portfolio in 2011.

Capacity-building initiatives in the sectorincluded the training of some 567entrepreneurs under the Business EnterpriseEmpowerment Programme (BEEP),undertaken jointly with the Micro Small andMedium Enterprise Alliance (MSME). The Unitalso continued its support for the MonaSchool of Business’ Venture CapitalProgramme which highlights the principles ofentrepreneurship and, in particular, theimportance of a well-conceived and writtenBusiness Plan.

As part of the ongoing relationship with theScotiabank Chair at the University of



Overview of Business Lines

“REAL TIME” SALES AND SERVICE

Our non-branch sales initiative, was successfully piloted in 2010, as part of ourongoing effort to improve the banking experience.

Under this programme, our sales channels are being expanded to provide a rangeof convenient, value-added services outside of the formal branch network.

During the year, a dedicated team of Sales Associates was assigned to pursuemotor vehicle financing and credit card sales opportunities.

We also launched an innovative BANK@Work programme, where we offer“convenient and real time” service to employees in corporate offices, providingthem with basic retail banking services, and saving them the time and hassle oftravelling to the Bank.

In the wake of positive customer feedback, we intend to expand theBANK@Work programme in 2012 for the benefit of customers across the island.

BRANCH BANKING TEAM -(from left to right)Michael Shaw, District Vice-President, Metro North Wayne Powell, Executive Vice-President, Retail BankingPeter Walters, District Vice-President, Metro WestCourtney Sylvester, DistrictVice-President, Metro East


Overview of Business Lines (continued)

Technology, two lecture programmes were conducted duringthe year. Plans are also being made to expand the Enterprise-wide Risk Management Programme, aimed at reducing creditdefault risk and promoting sustainability of SMEs.

Training and development of our internal team to providevalue-added service to customers was a critical componentof the SME strategy and as such Business Banking Officerswent through various training programmes to equip themwith the necessary skills and knowledge.

Funding Support During the year, a J$500 million Productive Sector GrowthFund, the second of its kind, was launched to stimulate growth in businesses with J$50 million specificallyearmarked for start-up businesses. At year-end, 75% of theoverall fund was allocated.

Health care professionals, pharmacists, accountants, lawyersand architects, are among the targeted beneficiaries of theScotia Professional Plan which was launched in 2011 toprovide financing for working capital and equipment needs.

The installation of a new loan processing platform during theyear has improved the Unit’s efficiency, and the reduced turn-around time in processing loans has facilitated greatercustomer contact.

Spawning Productive CollaborationsThe Unit extended its reach in the marketplace in 2011,forging alliances with several key groups in the SME sector.These include a J$2 billion partnership under a five-yearagreement with the Medical Association of Jamaica (MAJ);and working with members of the fashion industry todetermine their funding needs and craft relevant financialsolutions.

HEEDING OUR CUSTOMERS

The Customer Experience bar was raised in 2011, asemployees in the Scotiabank Group increased theirappreciation of the “direct link between quality customerexperience and increased revenue flows.”

Initiatives were implemented in order to entrench a cultureof excellence and accountability at all levels of theorganization. Targeted training was provided through skills-building sessions led by the newly-appointed ServiceChampions, to drive service excellence in our branches.

At the heart of the service thrust is a Customer Feedbackmechanism. A monthly survey, which is administered acrossthe Bank’s branch network, has facilitated closer monitoringof critical service delivery functions; and has improved theability of branches to quickly assess and respond to customerneeds. The survey instrument and our specially-designedsystem to track and resolve complaints have allowed fortargeted interventions to improve service delivery.

Customer Service Checklists designed to promote correctpractices and consistent high standards of performance,mystery shopping in branches to assess customer experiencefirst-hand and internal competitions aimed at correctingspecific weaknesses were among other strategies adopted.This thrust will be continued in 2012.


THE SMALL AND MEDIUM ENTERPRISES TEAM- (from left to right) Asquith Brown, Manager, Product &Portfolio,, Pamela Douglas, Senior Manager, SME Projectsand Mrs. Patsy Latchman Atterbury, Vice-President, Small & MediumEnterprises


CORPORATE & COMMERCIAL BANKING

Amidst an environment characterised by sluggish loandemand, weak credit fundamentals, and reduced lendingrates, the Corporate and Commercial Banking Centre(CCBC) reported revenues of $6.5 billion.

BREAKING NEW GROUND WITH CUTTING-EDGESERVICES

Various ground-breaking banking solutions introduced by theCCBC over the past year effectively positioned the Divisionfor a new era of global business to meet the needs ofcustomers in the national, regional and international markets.

Our Electronic Commercial Services Unit was rebranded toGlobal Transaction Banking to reflect the comprehensive,cutting-edge services offered by the CCBC acrossgeographic borders and customer segments.

During the year, our Cash Management Services were

enhanced by the Scotia On-line for Business solution whichoffers several new features and functionalities with improvedsecurity. These include an Information Reporting Dashboardwhich allows customers to manage day-to-day transactionsacross accounts and provides quick links to importantinformation. Third-party transfers, wire payments, crosscurrency transactions, money management, and outboundreporting services through which customers may view theiraccounts in other Caribbean territories through relationshipbanks, are among other innovations.





5.8%

37.8%

737.0%

15.8%

47.8%

887.0%



JSE Index 8% 5% 5% 14% 1% 2%

JSE Select Index 46% 10% 15% 38% 5% 3%



















10.0%




15.8%


5.8%


15.8%


JSE Select Index

JSE Index


Life Insurance*


10%

5%

15%

150.0%

10.0%

46%

8%




5%

1%

7%

887.0%

47.8%

38%15%

14%5%

21%9%

737.0%

37.8%



3%

2%

2%

887.0%

47.8%


Over 5 Years

Revenues

BANKINGLREFINANCIA

1,504

$ millions

112,425

$ millions20101120

PERFORMANCE

1,504

$ millions2010

Revenues


6,524

$ millions1120


6,855


BANKING

Profit before taxes

Expenses

TREASURYFINANCIA

(9,159)

Profit before taxes

(9,083)

PERFORMANCE

(9,159)

Profit before taxes

Expenses


1,7661,766

(4,758)

Profit before taxes


2,3982,398

(4,457)


Profit before taxes

Expenses

Revenues

(69)

3,098

$ millions

Profit before taxes

2,392

$ millions20101120

(64)

3,098

$ millions2010

Profit before taxes

Expenses

Revenues

(1,227)

3,874

$ millions

Profit before taxes

1120

(1,239)

3,575


Profit before taxes

Expenses

Revenues


(925)

5,393

$ millions

Profit before taxes

(957)

5,286

$ millions20101120


(925)

5,393

$ millions2010

4,4684,329

CCBC SENIOR MANAGEMENT TEAM - (from left to right) Madgelyn Flake, Senior Manager, Commercial Client RelationshipsHorace Stephens, Senior Manager, Commercial Client Relationships, Marcette McLeggon, Vice-President, Credit SolutionsMichael Thompson, Senior Vice-President, Corporate & Commercial Banking, Denise Brown, Senior Manager, Corporate ClientRelationships, Kevin Reese, Senior Manager, Commercial Client Relationships, Nadine Haywood, Senior Manager, Corporate &Government Relationships, Craig Mair, Assistant General Manager, Commercial Client Relationships & Business DevelopmentCarlene Lyn, Senior Manager, Credit Solutions, Howard Ebanks, Senior Manager, Credit Solutions.




The CCBC also introduced state-of-the-art terminaltechnology in 2011 to enhance the card-processingcapabilities of our merchants. They now have access towireless portable terminals which facilitate convenient andcost-effective mobile card processing, Internet Protocol (IP)terminals which offer high-speed service through existing on-line connections; and an improved dial-up terminal which hassignificantly reduced the time frame for settlements.

In our continued effort to address the gamut of customers’financial needs in a one-stop experience, the CCBC has alsoadded Insurance Premium Financing to its suite of products.

Best Trade BankNamed by the internationally-recognized Trade FinanceMagazine as the Best Trade Bank in Central America andthe Caribbean, the CCBC Division continues to supportbusiness growth of our diverse client base.

The TradeExpress Elite electronic system is another user-friendly innovation which was upgraded to provide afully-automated and secure platform for importers andexporters. The facility provides web access for thepreparation and monitoring of Letters of Credit and theprocessing of purchase orders, among other features.

Major deals executed during 2011 included a US$185 millionmulti-currency and term-secured facility to assist in therefinancing and expansion of the Facey Group of Companieswhose operations in telecommunications, business solutionsand the distributive sector span some 30 countries in theCaribbean, the Americas and Europe. A US$115 millionsyndicated loan for upgrading of the National WaterCommission’s operations is expected to enhance the deliveryof water in Kingston and St. Andrew; and our US$20 millionparticipation in a syndicated facility to West Kingston PowerPartners will facilitate upgrading of electricity services in theCity’s western belt.

Exploiting New OpportunitiesThe development of value-added products, as well as newand innovative Global Transaction Banking services for ourlocal and regional customers will be a major focus of our2012 business programme. We also intend to grow the mid-market commercial client segment, increase our presence inniche markets that are now underserved, strengthen ourcustomer support initiatives and leverage the full range ofproducts and expertise in the Scotiabank Group worldwide,as we continue to position CCBC as the leading financialpartner and service provider in Jamaica.

CORPORATE AND COMMERCIAL BANKING (continued)

Bruce Bowen, President & CEO, Scotiabank (left)shakes hands with the Hon. Dr. Horace ChangMinister of Water and Housing, (right) on signing theloan deal to upgrade the National WaterCommission’s operations.


TREASURYRevenues from our treasury operations declined due to theimpact of lower yields on our investment portfolios and lowerspreads on foreign exchange trades. Subsequent to theimplementation of the Jamaica Debt Exchange (JDX) inFebruary 2010, market interest rates have declined to historiclows as the market experienced continued stability inexchange rates and inflation.

MAINTAINING MARKET RELEVANCE

For the fourth consecutive year, Scotiabank was named asJamaica’s Best Foreign Exchange Providerby the influentialinternational magazine, Global Finance, as we continued tomeet the evolving needs of our customers. We grewbusiness volumes and market share this year in a tight andcompetitive environment. We are now ranked second in thelocal industry, in respect of market share in foreign exchangesales volumes, moving up from third place in 2010.

During 2011, we deepened client relationships and focusedon increasing the quantity of foreign exchange provided foron-line transactions, which has recorded double-digitgrowth since the service was introduced in2010.

Proactive contact with our business customersand prospects allowed us to guide them on thelatest developments in the foreign exchangemarket, as well as, the short-term outlook,thereby equipping them to make more informedtrading decisions.

Growing With Our CustomersIn 2012, we will apply more targetedapproaches in garnering market intelligence, so

that adequate resources can be allocated to marketsegments with strong growth potential.

We are looking at implementing new technology to assistdecision-making by in-branch customers; and we expect tointroduce this one-of-a-kind service to the local bankingsector on a pilot basis in the year ahead.

We remain committed to improving our service quality, bothin terms of the response time and the appropriateness of thesolutions delivered.





5.8%

37.8%

737.0%

15.8%

47.8%

887.0%



JSE Index 8% 5% 5% 14% 1% 2%

JSE Select Index 46% 10% 15% 38% 5% 3%



















10.0%




15.8%


5.8%


15.8%


JSE Select Index

JSE Index


Life Insurance*


10%

5%

15%

150.0%

10.0%

46%

8%




5%

1%

7%

887.0%

47.8%

38%15%

14%5%

21%9%

737.0%

37.8%



3%

2%

2%

887.0%

47.8%


Over 5 Years

Revenues

BANKINGLREFINANCIA

1,504

$ millions

112,425

$ millions20101120

PERFORMANCE

1,504

$ millions2010

Revenues


6,524

$ millions1120


6,855


BANKING

Profit before taxes

Expenses

TREASURY PERFORMANCELL PERFORMANCEFINANCIA

(9,159)

Profit before taxes

(9,083)

PERFORMANCE

(9,159)

Profit before taxes

Expenses


(4,758)

Profit before taxes


(4,457)


Profit before taxes

Expenses

Revenues

3,0343,034

(69)

3,098

$ millions


2,392

$ millions20101120

3,0343,034

(64)

3,098

$ millions2010

Profit before taxes

Expenses

Revenues

(1,227)

3,874

$ millions

Profit before taxes

1120

(1,239)

3,575


Profit before taxes

Expenses

Revenues


(925)

5,393

$ millions

Profit before taxes

(957)

5,286

$ millions20101120


(925)

5,393

$ millions2010

4,4684,329

TREASURY TEAM - (from left to right standing)Lisa-Ann Tenn, Foreign Exchange Trading Officer,Gary-Vaughn White, Director, Treasury and ForeignExchange Trading, Karen Bolton, Treasury Officer,(from left to right sitting) Keri-Leigh Radcliffe,Foreign Exchange Trading Assistant, Pauline Ewan, Foreign Exchange BusinessDevelopment Manager, and Hugh Miller, Vice-President, Treasury.



SCOTIA JAMAICA BUILDING SOCIETYCHANGING LANDSCAPES IN HOUSING

Despite lackluster economic growth, Scotia Jamaica BuildingSociety (SJBS) provided more than J$2,700 million inmortgage loans for 2011, almost double the volume in 2010.This was the highest volume of mortgage sales in the 17 yearhistory of the SJBS. Total assets grew by 29%.

We targeted first-time home owners and professionals andmade the strategic move to lower our mortgage interest rateto 10.75%. These initiatives contributed to a surge in loandemand during the second half of the year.

Strengthening Strategic PartnershipsIn the year under review, SJBS strengthened its strategicalliance with housing developers and realtors, who, as criticalpartners, provide quality housing solutions to satisfy ourgrowing mortgage portfolio. One such initiative was ourpartnership with New Era Homes, developers of CaymanasEstates, St. Catherine.

The timely acquisition of a portfolio of mortgages enabledSJBS to extend its reach to a new group of customers whohad no prior relationship with the Scotiabank Group; andthese clients are now fully integrated into the Group’s servicenetwork.

Consistent with our ongoing client education thrust, SJBSorganised several presentations about home ownership forpersons in our target market, to highlight affordable, availablehousing solutions; and the range of mortgage financingoptions which we offer.

SJBS further improved its efficiency in the processing ofmortgage applications during the year; and at the same time,leveraged the extensive Scotiabank branch network in thedistribution of mortgages.

A Brighter FutureDespite the current economic challenges, there are growingsigns that the housing market will continue to trend upwards.With that assurance, in 2012, SJBS remains committed to itsmandate to offer customers competitive interest rates; andfurther improve the efficiency of its operations, whileleveraging an upgraded branch structure and new saleschannels.


SCOTIA JAMAICA BUILDING SOCIETY SENIOR MANAGEMENT TEAM -(from left to right) - Linley Reynolds, Assistant General Manger, BusinessDevelopment and Non-Branch Sales, Keron Shand, Manager, Operationsand Compliance, Gladstone Whitelocke, Vice-President Non-Branch Sales& General Manager and Michelle Scott, Manager, Financial Reporting.

SCOTIA INVESTMENTS JAMAICA LTD.

Scotia Investments Jamaica Limited (SIJL) maintained itsstrong position in the securities market, and has increasedprofitability by $311 million or 13%. SIJL, backed by strongcustomer confidence, flourished in 2011, despite challengingmarket conditions. The funds under management by SIJL allrecorded strong growth during the year under review. TheScotia Premium Growth Fund ended the year with J$1.9billion assets under management to become the largestequity-linked Unit Trust Fund in Jamaica; while the ScotiaPremium Fixed Income Fund grew significantly to some J$18billion. The leading player in the local Unit Trust sector, SIJLnow controls some 65% of the market.

The US dollar-denominated Scotia Caribbean Income Fund,with US$60 million in assets at the end of the financial year,turned in another stellar performance. Our total funds undermanagement (on and off balance sheet) grew by 13% to$135.2 billion as at October 31, 2011.

These outstanding results are due to the superior wealthmanagement solutions which we offer to meet our clientsunique investment needs, the Company’s diversification ofrevenue streams and a strong sales and distribution strategy,focused on building and enhancing our clients’ portfolios.





5.8%

37.8%

737.0%

15.8%

47.8%

887.0%



JSE Index 8% 5% 5% 14% 1% 2%

JSE Select Index 46% 10% 15% 38% 5% 3%



















10.0%




15.8%


5.8%


15.8%


JSE Select Index

JSE Index


Life Insurance*


10%

5%

15%

150.0%

10.0%

46%

8%




5%

1%

7%

887.0%

47.8%

38%15%

14%5%

21%9%

737.0%

37.8%



3%

2%

2%

887.0%

47.8%


Over 5 Years

Revenues

BANKINGLREFINANCIA

1,504

$ millions

112,425

$ millions20101120

PERFORMANCE

1,504

$ millions2010

Revenues


6,524

$ millions1120


6,855


BANKING

Profit before taxes

Expenses

TREASURYFINANCIA

(9,159)

Profit before taxes

(9,083)

PERFORMANCE

(9,159)

Profit before taxes

Expenses


(4,758)

Profit before taxes


(4,457)


Profit before taxes

Expenses

Revenues

(69)

3,098

$ millions

Profit before taxes

2,392

$ millions20101120

(64)

3,098

$ millions2010

Profit before taxes

Expenses

Revenues

2,6472,647

(1,227)

3,874

$ millions

Profit before taxes

1120

2,3362,336

(1,239)

3,575


Profit before taxes

Expenses

Revenues


(925)

5,393

$ millions

Profit before taxes

(957)

5,286

$ millions20101120


(925)

5,393

$ millions2010

4,4684,329

SCOTIA INVESTMENTS SENIORMANAGEMENT TEAM(from left to right standing) Dr. Adrian Stokes, Vice-PresidentStrategic Planning, Projects andProduct DevelopmentKarl McKenzie, Vice-PresidentBusiness Support Berisford Grey, Vice-PresidentOrigination & Capital MarketsBrian Frazer,Vice-President, AssetManagement and GeneralManager, Scotia AssetManagement (Jamaica) LimitedLissant Mitchell, Chief OperatingOfficer(from left to right sitting) Andrea Tinker, Vice-President Re-engineering Projects Anya Schnoor, Chief ExecutiveOfficer, Vanessa Reid-BootheVice-President, Sales and Serviceand Yvonne Pandohie, Vice-President and Chief FinancialOfficer.





New Opportunity for GrowthDuring the year, Scotia Investments Jamaica Limited (SIJL)rebranded its operations to align with the globally-recognizedScotiabank International Wealth Management operations,and capitalize on the strength of the international brand.

A new Unit Trust Fund, the Scotia Premium Money MarketFund, was launched during the year. SIJL also entered into anagreement with Scotia Investments Trinidad and Tobago fordistribution of the Scotia Caribbean Income Fund in thatcountry; and the market response has been positive.

Sales and Service Focus In 2011, we concentrated on sharpening the skills of ourworld-class sales team through individual coaching andspecialized workshops, to promote portfolio managementstrategies and sales techniques for the business market.

The comprehensive update of our client database during theyear under review was an essential feature of our intensifiedservice delivery thrust; and it is also expected to providecritical information for our new core system which will comeon stream in 2012.

Positioning for GrowthThe roll-out of our new core system, will be a central focus ofSIJL’s operation in 2012, as we seek to further refine ourservice delivery and grow our off-balance sheet business. Wewill also continue training our team members to enhance theirknowledge of our business and develop their leadershippotential. A customer loyalty programme and the launch ofseveral new products to meet client needs in different assetclasses are also on the drawing board for what we expect willbe another robust year of business.

SCOTIA INVESTMENTS JAMAICA LTD. (continued)

SCOTIA JAMAICA LIFE INSURANCECOMPANY LIMITED

INDUSTRY PLAYER

While 2011 was a challenging year for Scotia Jamaica LifeInsurance Company Limited (SJLIC), we exceeded our salestargets, and further boosted our market share.

At the end of 2010, we held 71% market share in theApproved Retirement Schemes (ARS) market and in 2011,we have consistently been ranked first in terms of annualizedpremiums per agent and second, in terms of gross premiumincome and number of policies sold.

SJLIC contributed $4.3 billion to the earnings of theScotiabank Group in 2011. During the year, we starteddistribution of the Heritage Education Savings Plan through11 branches and the response has been very positive.

Other product enhancements included an increase in thecoverage limits on our flagship product, ScotiaMINT. We alsoincreased coverage on our Scotia CritiCare plan for whichbenefits of up to $3 million are now being offered. Weintroduced two CritiCare product options – an affordable

Base Plan and a refund of premium option. During the year,we pioneered telemarketing of these products through ourContact Centre.

Achievements RecognizedSJLIC has established a strong tradition of sales excellence inthe insurance sector, earning the local industry’s topbancassurance sales award for three consecutive years.Jermin Vanzie, Senior Insurance Advisor, Savanna-La-MarBranch, received the 2010 Top (Bancassurance) ProductionMember of the Year Award, presented by the JamaicaAssociation of Insurance and Financial Advisors (JAIFA). Inaddition, 14 SJLIC Agents qualified for the 2010 AnnualMillion Dollar Round Table, which recognizes the top 1% of

life insurance sales agents in theworld.

New HorizonsAs part of our strategy to expand ourbusiness into a multi-line, multi-product entity, SJLIC will launch newproducts and distribute additionalthird party products in 2012 to satisfythe growing demand for selectiveinsurance policies. We also plan toexplore new distribution channels inan effort to strengthen our marketpresence.






5.8%

37.8%

737.0%

15.8%

47.8%

887.0%



JSE Index 8% 5% 5% 14% 1% 2%

JSE Select Index 46% 10% 15% 38% 5% 3%



















10.0%




15.8%


5.8%


15.8%


JSE Select Index

JSE Index


Life Insurance*


10%

5%

15%

150.0%

10.0%

46%

8%




5%

1%

7%

887.0%

47.8%

38%15%

14%5%

21%9%

737.0%

37.8%



3%

2%

2%

887.0%

47.8%


Over 5 Years

Revenues

BANKINGLREFINANCIA

1,504

$ millions

112,425

$ millions20101120

PERFORMANCE

1,504

$ millions2010

Revenues


6,524

$ millions1120


6,855


BANKING

Profit before taxes

Expenses

TREASURYFINANCIA

(9,159)

Profit before taxes

(9,083)

PERFORMANCE

(9,159)

Profit before taxes

Expenses


(4,758)

Profit before taxes


(4,457)


Profit before taxes

Expenses

Revenues

(69)

3,098

$ millions

Profit before taxes

2,392

$ millions20101120

(64)

3,098

$ millions2010

Profit before taxes

Expenses

Revenues

(1,227)

3,874

$ millions

Profit before taxes

1120

(1,239)

3,575


Profit before taxes

Expenses

Revenues

INSURANCE SERVICES PERFORMANCELL PERFORMANCEFINANCIA

4,4684,468

(925)

5,393

$ millions


(957)

5,286

$ millions20101120


4,4684,468

(925)

5,393

$ millions2010

4,4684,329

THE SCOTIA INSURANCE SENIOR MANAGEMENT TEAM - (from left to right) - Kenroy Wedderburn,Manager, Operations Development and Credit InsuranceHugh Reid, Senior Vice-President & General Manager, Denton Campbell,Manager Operations andService, Marsha Williams, Manager, Finance & Reporting, Lorna Gordon Elliott,ComplianceManager, Lana Forbes,Director Sales and Channel Delivery, and Erica Anderson, ProductDevelopment Manager.



SCOTIA PRIVATE CLIENT GROUP

LAYING THE FOUNDATION FOR FUTURE GROWTH

The Scotia Private Client Group (SPCG) recorded strongfinancial performance in 2011, with growth in all key areasof operations. Key results for the year included growth of 54%in the total loan portfolio, and 116% in Non-Interest Revenue.

We strengthened our leading position in this segment of themarket through a diverse offering spanning private banking,investment and wealth structuring. We continue to build onthat advantage by ensuring that the complex financial needsof our high net-worth clients are served effectively.

Our customized borrowing solution is one of the key areaswhich has contributed to our success. In the prevailing lowinterest rate environment, this solution has allowed clients toleverage their existing assets and augment their wealththrough timely investments.

During the year, we also achieved a 22% increase in our clientbase, due in part to the decision to extend our service outsideof Kingston. Supported by our Corporate & Commercial andRetail Banking partners, as well as our dedicated Team ofExperts, SPCG has made impressive gains in this area.

Exclusive Services We continue to deepen our client relationships throughvarious customer facing activities. We held a workshop on“Succession and Legacy Planning for Families,” whichprovided a timely focus on the importance of planning for theseamless transition of assets from one generation to the nextand long-term wealth preservation.

During the year we rolled out new benefits to our clientsincluding Priority/Pass access to the new and exclusive ClubKingston and Club Montego Bay airport lounges. Priority Passis offered through MasterCard® Black, SPCG’s exclusivecredit card.

In the coming year, we will expand our team to moreeffectively serve our growing client base and broaden ourinvestment advisory services. Other initiatives in the pipelineinclude enhancements to our core offering, and continuedstrengthening of the team’s skill and expertise.


SCOTIA PRIVATE CLIENT GROUP MANAGEMENT TEAM (Left to right) Richelle Ehikhametalor, RelationshipOfficer, Paula Brown, Financial Advisor,Debra Lopez-Spence, Centre Director, Heather Walker-Boyd,Relationship Officer, Richard Bertram, Financial Advisor, Christine Morrison, Relationship Manager, Roger Grant, FinancialConsultant, Elaine Paul, Senior Client Service Officer,Opal Levy-Clarke, Relationship Manager.


Overview

Our risk management framework has been developed toaddress the diversity of the Group’s business activities. Wemanage risk through a framework of risk principles,organizational structures and risk measurement andmonitoring processes that are closely aligned with theactivities of our business units. This framework is supportedby a robust risk management culture and a strongcommitment to active management of risks by the Board ofDirectors, senior executive team and business linemanagement.

The primary goals of risk management are to ensure that theoutcomes of risk-taking activities are predictable andconsistent with the Group’s objectives and risk tolerance, andthat there is an appropriate balance between risk and rewardin order to maximize shareholder returns. Effective executionof these activities will ensure that we protect the safety andstability of customers’ funds that are placed in our fiduciarycare.

We have a comprehensive risk management framework tomonitor, evaluate and manage the principal risks assumed inour business activities. These include credit, market, liquidity,operational and reputational risks. The framework isintegrated with the Group’s strategic and business planningprocesses.

The framework has four main components:1. Policies and Limits2. Guidelines3. Processes and Standards4. Measurement and Reporting

Each of these components is continually reviewed andupdated to ensure that they are consistent with risk-takingactivities, and remain relevant to the business and financialstrategies of the Group.

Risk Management Framework

Policies & LimitsPolicies define the Group’s overall risk appetite, and aredeveloped based on the risk culture desired by the units andthe requirements of regulatory authorities, with input fromthe Board of Directors and senior executive management.Policies set the boundaries on the types of risks the Group isprepared to assume and specify the manner in which theGroup assumes these risks. Limits are set for two purposes.First, limits control risk-taking activities within the tolerances established by the Board of Directors and senior executivemanagement. Second, limits establish accountability for keytasks in the risk-taking process and establish the level or

conditions under which transactions may be approved orexecuted.

GuidelinesGuidelines are the directives provided to implement policies.These may relate to aggregate concentrations andexposures, risk/return benchmarks, and acceptable liquiditylevels. These may change from time-to-time, due to marketor other circumstances.

Processes & StandardsProcesses are the activities associated with identifying,evaluating, documenting, reporting and controlling risk.Standards define the breadth and quality of informationrequired to make a decision, and the expectations in terms ofquality of analysis and presentation.

Measurement, Monitoring and ReportingMeasurement tools quantify risk across products andbusinesses and are used, among other things, to determinerisk exposure. The Credit Risk, Market Risk, and OperationalRisk units of the Group, operate independently of the businesslines and are responsible for developing and maintaining anappropriate suite of such tools to support the operations ofthe Group. A comprehensive summary of the Group’s riskprofile and performance of the portfolio against definedgoals is presented quarterly to the Board of Directors.

Internal Audit independently monitors the effectiveness thesepolicies, procedures and internal controls through periodictesting of the design and operation of the processes. InternalAudit reports independently to the Audit and ConductReview Committee of the Board on the effectiveness of thesepolicies, procedures and internal controls.

Credit RiskCredit risk is the risk of loss resulting from the failure of aborrower or counterparty to honour its financial orcontractual obligations to the Group.

Credit risk is created in the Group’s direct lending operations,and in its funding, investment and trading activities wherecounterparties have repayment or other obligations to theGroup. The effective management of credit risk requires theestablishment of an appropriate credit risk culture. Key creditrisk policies and credit risk management strategies areimportant elements used to create this culture.

Scotia Group’s credit risk is managed through strategies,policies and limits that are approved by the Board ofDirectors. The credit risk strategy defines target markets andrisk tolerances that are developed at an all-Group level, and

Risk Management


Risk Management (continued)


then further refined at the business line level. The objectivesof the credit risk strategy are to ensure that for the Group,including the individual business lines: • target markets and product offerings are well defined, • the risk parameters for new underwritings and for the

portfolios as a whole are clearly specified, and • transactions, including origination and syndication are

managed in a manner to ensure the goals for theoverall portfolio are met.

The Group’s credit risk rating systems are designed toprovide for a meaningful differentiation of risk, and allowsfor reasonable estimation of loss characteristics at theportfolio and risk grade level. The credit risk rating systemsprovide consistency in terms of credit adjudication, minimumlending standards by risk ratings, and reporting of credit risk.The Group periodically reassesses its risk ratingmethodologies and makes enhancements when necessary.

The Group’s portfolio management methodologies aredesigned to facilitate consistent underwriting and earlyidentification of problem loans. The Groups retail andcommercial collections units are organised to support theefficient recovery of late payments and outstandingamounts on credit facilities which are in default.

Corporate and CommercialPortfolio management objectives and risk diversification arekey factors in setting policies and limits. Credit risk limitscovering specified industries and exposures are reviewedand approved by the Board of Directors annually, andapplied through the credit origination and review process.

Credit exposures are managed through limits, lendingcriteria and guidelines relevant to each particular risk type.

Borrower limits are set within the context of establishedguidelines for individual borrowers, particular businesssegments, and certain types of lending, to ensure the Groupdoes not have excessive concentration in any singleborrower, or related group of borrowers. Through theportfolio management process, loans may be syndicated orother actions pursued to reduce overall exposure to a singlename. The Group’s credit risk limits to counterparties in thefinancial and government sectors are also managedcentrally to optimize the use of credit availability and toavoid excessive risk concentration.

The decision-making process for corporate and commercialcredit exposures is intended to ensure that risks areadequately assessed, properly approved, continuallymonitored and actively managed. All significant creditrequests are processed through the credit adjudication unitsof the Group.

The Group uses a dual risk rating system which separatelyassesses the risk of borrowers and their associated creditfacilities. Borrower risk is evaluated using methodologiesthat are specific to particular industry sectors and/orbusiness lines. The risk associated with facilities of a givenborrower is assessed by considering the facilities’ structuraland collateral-related elements.

Borrower and facility risk ratings are assigned when a facilityis first authorized, and are promptly re-evaluated andadjusted, if necessary, as a result of changes to thecustomer’s financial condition or business prospects.Reevaluation is an ongoing process, and is done in thecontext of general economic changes, specific industryprospects, and event risks, such as revised financialprojections, interim financial results and extraordinaryannouncements.

The risk ratings also determine the management level atwhich the facilities can be authorized or amended. Lower-rated credits require increasingly more senior managementinvolvement.

Retail Key factors considered in the assessment of the credit riskof the individual borrower include: the borrower’s currentand projected income, debt servicing commitments andcredit record; and economic trends. Based on thisassessment, a risk rating is assigned to the individualborrower and the appropriate amount and structure ofcredit to the individual is determined.

Individual credit exposures are regularly monitored by thebusiness line units for signs of deterioration. In addition, areview and risk analysis of each borrower is conductedannually, or more frequently for higher-risk borrowers.

Portfolio reports reviewed by Credit Risk Management serveto identify risk-related trends in the Group’s portfolio.

The credit risk exposure for the Group is summarized in Note 48 (b).

Market RiskMarket risk arises from changes in market prices and rates(including interest rates, credit spreads, equity prices, andforeign exchange rates), the correlations among them, andtheir levels of volatility.

The Group assumes market risk in both its trading and non-trading (funding and investment) activities. Market riskexposures are managed through specific operating policies,and limits at the product, portfolio, business unit andbusiness line levels, and for the Group in total.


These policies and limits are established by the Board ofDirectors, and are reviewed and approved at least annually.

The Group’s Market Risk unit provides independent oversightof all significant market risks, and supports the business unitsand Assets & Liabilities Committee (ALCO) with analysis, riskmeasurement, monitoring, and reporting. The Group uses avariety of metrics and models to measure and control marketrisk exposures. The measurements used are selected basedon an assessment of the nature of risks in a particular activity.The principal measurement techniques are Value at Risk(VAR), stress testing, sensitivity analysis and simulationmodeling, and gap analysis. Models are independentlyvalidated prior to implementation and are subject to formalperiodic review. To ensure compliance with policies and limits,market risk exposures are independently monitored on acontinuing basis, either by the Market Risk unit or by the backoffice. Senior management, business units, ALCO, and theBoard of Directors are provided with regular reports ofmarket risk exposures by business line and risk type.

Interest rate riskInterest rate risk is the risk of loss due to: changes in the level,slope and curvature of the yield curve; the volatility of interestrates; and mortgage prepayment rates.

The Group actively manages its interest rate exposures withthe objective of enhancing net interest income withinestablished risk tolerances. Interest rate risk is managed inaccordance with Board-approved policies and limits, whichare designed to control the risk to income and economicvalue of shareholders’ equity. The income limit controls theeffect of a specified shift in interest rates on the Group’sannual net income, while the economic value limit controlsthe impact of a specified change in interest rates on thepresent value of the Group’s net assets. Interest rate exposurein individual currencies is also controlled by gap limits. Gapanalysis and sensitivity analysis are used to assess exposureand for planning purposes.

The interest rate risk exposure for the Group is summarizedin Note 48 (c) (i).

Foreign currency riskForeign currency risk is the risk of loss due to changes in spotand forward prices, and the volatility of currency exchangerates.

Foreign exchange risk arises from trading activities andforeign currency operations. In its trading activities, the Groupbuys and sells currencies in the spot market for its customers.Foreign exchange gains and losses from these activities areincluded in other income.

The Group mitigates the effect of foreign currency exposuresby financing its net investments in its operations with

borrowings in the same currencies. Foreign currency riskarising from the Group’s foreign currency trading is subject toBoard approved limits. The ALCO reviews and managesthese exposures.

The foreign exchange risk exposure for the Group issummarized in Note 48 (c) (ii).

Equity RiskEquity risk is the risk of loss due to changes in the prices, andthe volatility of individual equity instruments and equityindices.

The Board sets limits on the level of exposure, anddiversification is a key strategy employed to reduce theimpact of the non-performance of a specific class of assets.Given the potential volatility in the value of equities and thenon-interest bearing characteristics of these instruments, theGroup limits the amount invested in them.

The equity risk exposure for the Group is summarized in Note 48 (c) (iii).

Liquidity riskLiquidity risk is the risk that the Group is unable to meet itsfinancial obligations in a timely manner at reasonable prices.Financial obligations include liabilities to depositors andpolicyholders, settlement of securities borrowing andrepurchase transactions, and lending and investmentcommitments.

Effective liquidity risk management is essential in order tomaintain the confidence of depositors and counterparties,and to enable our core businesses to continue to generaterevenue, even under adverse circumstances. This risk ismanaged within the framework of policies and limits that areapproved by the Board of Directors. The Board receivesreports on risk exposures and performance against approvedlimits.

ALCO provides senior management oversight of liquidity riskand meets monthly to review the Group’s liquidity profile. Thekey elements of our liquidity risk framework are: •Measurement and modeling – the Group’s liquidity model

measures and forecasts cash inflows and outflows on adaily basis. Risk is managed by a set of key limits over the maximum net cash outflow by currency over specified short-term horizons and a minimum level of core liquidity.

• Funding diversification – the Group actively manages thediversification of its deposit liabilities by source, type ofdepositor, instrument and term.

•Monitoring balance sheet liquidity ratios against internal and regulatory requirements.




• Core liquidity – the Group maintains a pool of highly liquid, unencumbered assets that can be readily sold orpledged to secure borrowings under stressed market conditions or due to company specific events. The Group also maintains liquid assets to support its intra-day settlement obligations in payment, depository and clearing systems.

• Contingency planning – the Group maintains a liquiditycontingency plan that specifies an approach for analyzing and responding to a liquidity crisis. The planoutlines the crisis management team’s mandate, the internal and external parties to be contacted to ensure effective distribution of information, and the actions that need to be considered at various stages of an event.

Liquidity ProfileThe Group maintains large holdings of liquid assets to supportits operations. In the course of the Group’s day-to-dayactivities, securities and other assets are pledged to securean obligation and participate in clearing or settlementsystems. Securities may also be sold under repurchaseagreements.

The liquidity risk exposure for the Group is summarized in Note 48 (d).

FundingThe Group ensures that its funding sources are welldiversified. Funding source concentrations are regularlymonitored and analyzed by type and by industry. Theprincipal sources of funding are capital, core deposits fromretail and commercial clients through our branch network,and wholesale funding. To ensure that the Group does notplace undue reliance on a single entity as a funding source,the Group maintains a limit on the amount of deposits it willaccept from any one entity.

Capital commitmentsScotia Group has an ongoing programme of capitalinvestment to provide the necessary level of technology andreal estate resources to service our customers and meet newproduct requirements. All major capital expenditures gothrough a rigorous review and approval process.

Operational RiskOperational risk is the risk of loss, whether direct or indirect, towhich the Group is exposed due to external events, humanerror, or the inadequacy or failure of processes, procedures,systems or controls.

Operational risk, in some form, exists in each of the Group’sbusiness and support activities, and can result in financialloss, regulatory sanctions and damage to Scotia Group’sreputation.

The Group has developed policies, standards andassessment methodologies to ensure that operational risk isappropriately identified, managed and controlled. Thegoverning principles and fundamental components of theGroup’s operational risk management approach include: • Accountability in the individual business lines for

management and control of the significant operationalrisks to which they are exposed

• A robust internal control environment • An effective organization structure through which

operational risk is managed, including:

– A Board of Directors responsible for sound corporategovernance

– Executive management who have clearly definedareas of responsibility

– A central operational risk management unitresponsible for developing methods to identify,assess and monitor operational risks – Independentspecialist units responsible for developing methodsto control/mitigate specific components ofoperational risk, including codifying policies andprocesses required to control those specific risks

– Separation of duties between key functions

– An independent internal audit departmentresponsible for verifying that significant risks areidentified and assessed, and for determiningwhether appropriate controls are in place to ensurethat overall risk is at an acceptable level

• A variety of risk management programmes, including aprogramme designed to promote compliance withrelevant laws and regulatory requirements. Compliancerisk is managed through an established network and aprocess that includes: monitoring regulatory changes;conducting compliance risk assessments; implementingpolicies and procedures; training; and monitoring andresolving issues.

Reputational RiskReputational risk is the risk that negative publicity regardingthe Group’s conduct, business practices or associations,whether true or not, will adversely affect its revenues,operations or customer base, or require costly litigation orother defensive measures.

Reputational risk is managed and controlled throughout theScotiabank Group by codes of conduct, governancepractices and risk management programmes, policies,procedures and training. The Group has an established,Board-approved reputational risk policy, as well as a policyand procedures for managing reputational and legal riskrelated to structured finance transactions.




CORPORATE HUMAN RESOURCES BUILDING OUR TEAM

Across Scotiabank Group in 2011, we sought to improve our'bench strength' of high potential leaders through strategictraining of the organisation's leadership corps, strengtheningof our sales teams and aggressive trainee recruitment anddevelopment. These initiatives have positively impacted ourability to satisfy the resource needs of the organization.

In our continued effort to build human capital, we alsorevisited our training and development programmes. Thefundamentals of coaching excellence for supervisory andmanagement staff was re-launched as well as thementorship programme for identified future leaders.External programmes were also supported with over $29million spent on educational assistance for staff membersand their children

'Sowing the seeds' for our next generation of leaders, thechildren of staff members benefited from the redesignedTake Our Kids to Work programme. This programmeexposes 13-18-year-olds to the world of work and providescareer guidance. Some 130 youngsters participated in thisyear’s programme that featured sessions on workplaceetiquette, departmental tours, career discussions andmeetings with senior management and executives.

Employee Consultations and Ombuds Services (ECOS)Employee Consultations and Ombuds Services (ECOS) in2011 continued to play a critical role in minimising potentialconflicts and improving interpersonal relationships. With theprimary focus for 2011 being conflict resolution education,employees were exposed to self-mediation techniques tobring increased awareness to the conflict managementprocess. Through this and other conflict resolution methodsand coaching, we have seen savings in management timeand productivity gains.



Our People

SCOTIABANK JAMAICA FOUNDATION BUILDING FOR THE FUTURE

In the face of the economic challenges that confrontedthe nation in 2011, ScotiaFoundation responded toopportunities to make a meaningful contribution to ourcommunities and demonstrate our corporate socialresponsibility. We committed some J$70 million tosupport educational initiatives, health interventions,community development, environmental projects andsports, during the year.

EducationA significant portion of our investment, $31.5 million,was channeled into education providing scholarships andbursaries to 358 students during the year andstrengthening educational institutions.

Thirteen new ScotiaFoundation Shining Star Scholarshipswere awarded to students who excelled in the Grade SixAchievement Test to attend high school and to scholarsstudying at local colleges and universities. The existingscholars had their scholarships continued and receivedbursaries to cover the costs for sitting the CaribbeanExamination Council and the Caribbean AdvancedProficiency Examination. The number of schools in theBreakfast Feeding Programme now stands at eight andour employees continued the mentorship programmesfor students.

For the fourth consecutive year, we contributed $6.5million to the Scotiabank Chair in Entrepreneurship andDevelopment at the University of Technology. TheFoundation also made the first of two disbursements of

a grant totalling $10 million for equipping the newAgricultural Laboratory at Northern CaribbeanUniversity. The laboratory is the first of its kind in theCaribbean.

Health and Community DevelopmentWe assisted the public health sector in the delivery ofcritical care with a donation of $10.3 million towards theScotiabank Jamaica Foundation Haemodialysis Unit atthe Cornwall Regional Hospital, as well as the ScotiabankAccident and Emergency Units at the University Hospitalof the West Indies and the Port Antonio Hospital. Inaddition, 10 students were treated in the Scoliosis andSpine Care programme at the Kingston Public Hospitaland 6 patient monitors were donated to the hospital.

ScotiaFoundation underwrote maintenance of theJamaica Cancer Society’s (JCS) mobile mammographyunit and the implementation of other JCS initiativesduring the year. We also led the way and were joined bymore than 800 persons islandwide for our RegionalHIV/AIDS Testing Day – an initiative which theScotiabank Group has spearheaded since 2008.

In every parish, Scotiabank contributed to variouscommunity programmes and activities, with donationstotaling $28 million. These programmes focused oncreating a bright future for children, caring for the elderlyat the Golden Age Home and supporting the PrivateSector Organization of Jamaica’s YUTE Programme toassist inner-city youngsters to find employment.

Preserving Our Environment


Our Community

(From left) Joan Gordon-Webly, Executive Director of the National SolidWaste Management Authority, Bruce Bowen, President and CEO ofScotiabank, and Scotiabank Volunteers help to clear garbage from thePort Royal coastline during Scotiabank’s Coastal Clean Up Day in March,2011.

Bruce Bowen, President & CEO and Wayne Powell, Executive Vice-President, Retail Banking, stand with our 2011 GSAT Scholars who wererecognised at our annual luncheon in August.


Our Community

Environmental protection was a major thrust in 2011 and$4 million was allocated for “Scotia Goes Green”initiatives which included the Scotia Eco Awards, for non-governmental organizations engaged in environmentalprojects. Protect the Environment Trust which operatesa recycling project, emerged the winner. Also an in-houseeducation drive among our employees saw an increasein paper recycling.

During the year, ScotiaVolunteers worked with the UnitedNations Environment Programme and several localorganizations on three major coastal clean-up days.Some 200 volunteers participated in the effort.

In 2012, the Foundation will work with the University ofthe West Indies Center for Marine Sciences on a Lion Fishawareness and control pilot project.

Nurturing Sports TalentScotiabank has invested heavily in nurturing sports talentand molding young lives. A major initiative this past yearwas the funding support provided to Breds Foundationin Treasure Beach to complete construction of a multi-purpose Sports Complex.

Some 80 bicycles were also donated to children inMontego Bay through Scotiabank Canada to helpencourage healthy living.

We continue to sponsor a range of team sports includingfootball, cricket, tennis and netball.

FootballScotiabank invested in the highly endorsed Valencia CFNext Generation Football Camp for the second year in arow. The Camp, exposes young, talented players to ahigher level of discipline and commitment, enhancingtheir competitiveness and increasing their chances ofmaking an earlier entry into professional football.

This year, over 210 participants took part includingfootball coaches, children 7 to 17 years old, and theNational Under 17 Football Team. An outreachcomponent was added which enabled thirty studentsfrom Holy Family Primary and Denham Town theopportunity to attend a one hour training session and amotivational workshop from the Spanish Coaches at nocost.

CricketScotiabank continues to promote the sport of cricketamong youngsters across Jamaica at both the primaryand preparatory level.

Forty-eight preparatory schools from across the islandparticipated in the Scotiabank/Jamaica CricketAssociation (JCA) Prep Schools’ Cricket Competition inJune 2011, the fourth year of The Bank’s sponsorship.The top twenty cricketers of the competition went on toparticipate in the second staging of the biennial threeday Scotiabank/JCA Cricket Camp held at Sabina Park,under the technical direction of the Ambassador, theHon. Courtney Walsh, and former West Indies Player andNational U-19 Coach, Robert Samuels, and NationalSenior Team Coach, Junior Bennett.

At the primary school level, the Scotiabank Kiddy CricketProgramme was expanded to include eight new KiddyCricket Coaches headed by a Kiddy Cricket Coordinatorappointed by the West Indies Cricket Board. This newcoaching team will oversee the programme and executea roster of activities, including hosting of CoachingWorkshops geared at delivering the fundamental skillsof cricket to Physical Education teachers and volunteers.In addition, a Kiddy Cricket Motivational Series wasinstituted in an effort to give Kiddy Cricketers theopportunity to interact with and learn from moreexperienced players.

NetballScotiabank’s investment in the development of the sportof netball continues to pay huge returns with four out ofseven girls from the Scotiabank Netball Training Camp’sUnder 13 and Under 16 squads being invited to train withthe Sunshine Girls this year. The Scotiabank JamaicaNetball Training Camp (Under 13 Nursery Programme)

Technical Director, the Hon. Courtney Walsh is surrounded bycampers seeking his autograph for their souvenir cricket ballsat the culmination of the Scotiabank/JCA Prep. School CricketCamp Awards Luncheon.


• Best Bank in Jamaica –Global Finance Magazine

• 2011 Award for Excellence – In the category of Industry and Service Provider in recognition of outstanding contribution to the promotion of wellness and healthy lifestyles - Environment Health Foundation

• 2011 Best Consumer Internet Bank – Global Finance Magazine

• Silver Medal for Best Contact Centre (Americas) –ContactCentreWorld.com

• Best Trade Bank in Central America and the Caribbean –Trade Finance Magazine

Our Community (continued)

also saw five new girls added to the nine member Under13 squad this year. Coming out of the Umpires’ PathwayProgramme, ten out of eleven girls from the Under 13and Under 16 squads successfully sat the UmpireTheoretical Exams and are now preparing for theirpractical exams in order to receive Umpire certification.

TennisScotiabank continued to facilitate the transition of juniorplayers to the professional level of tennis with 2011marking the tenth year of the Scotiabank sponsoredAmateur Tennis Tournament of the Lockett McGregorTournament Series and the fifth year of the ScotiabankTop 16 Invitational (Professional) Tennis Tournament inJuly 2011. This year, both tournaments engagedapproximately 100 of the country’s amateur andprofessional players combined.

Joan Forrest-Henry, Director, Marketing Services catches apass from Jill McIntosh, Technical Director, Jamaica NetballAssociation (JNA) (third from left) at the signing of therenewal of Scotiabank’s $12 million sponsorship of U13 &U16 netballers over 3 years. From left, looking on are Joy Watson, National U13 Coach , Marva Bernard, President,JNA, and Dorothy Hobson, 2nd Vice-President, JNA.

Our 2011 Awards

SCOTIA GROUP JAMAICA LIMITED

www.jamaica.scotiabank.com1-888-4-SCOTIA (726842)

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