Mr. Brian Porter reports

SCOTIABANK REPORTS THIRD QUARTER RESULTS

Bank of Nova Scotia had third quarter net income of $1,847-million, compared with net income of $2,351-million in the same period last year or $1,796-million excluding the gain of $555-million or 45 cents per share. Diluted earnings per share were $1.45 compared with $1.40 adjusting for the gain in the same period a year ago. Return on equity was 14.7 per cent compared with 15.7 per cent last year on the same basis.

"We delivered solid third quarter results for shareholders, with strong earnings in our personal and commercial businesses in Canadian and international banking," said Brian Porter, president and chief executive officer. "Our focus on customers across our diversified businesses contributed to our growth despite some challenging economic conditions.

"Canadian banking had a strong quarter with underlying performance up 15 per cent. All of its key business segments -- retail and small business banking, commercial banking and wealth management -- delivered very good growth. We continue to make investments to enhance customer experience and drive sustainable earnings growth.

"International banking continued to show good growth momentum with earnings up 11 per cent. Strong asset growth over the last year, primarily in the Pacific Alliance countries, complemented higher earnings in our other regions.

"A strong capital position of 10.4-per-cent common equity, along with earnings growth, allows us to continue making investments in our businesses to further organic growth, make selective acquisitions, and pay our shareholders via dividends. We announced a dividend increase of two cents, bringing our quarterly payment to 70 cents per share."

               SCOTIABANK'S RESULTS AND AVERAGE ASSETS AND LIABILITIES
                        (For the three months ended July 31, 2015)

                                                         Global
                                                        banking
Taxable equivalent         Canadian  International          and
basis ($ millions)          banking        banking      markets      Other      Total
Net interest income
(loss)                       $1,633         $1,467         $272      ($18)     $3,354
Non-interest income           1,226            813          693         38      2,770
Total revenues                2,859          2,280          965         20      6,124
Provision for credit
losses                          173            293           14          -        480
Non-interest expenses         1,510          1,294          464         66      3,334
Provision for income
taxes (loss)                    313            156          112      (118)        463
Net income                      863            537          375         72      1,847
Net income attributable
to non-controlling
interests in
subsidiaries                      -             52            -          -         52
Net income attributable
to equity holders of
the bank                        863            485          375         72      1,795
Average assets ($
billions)                       301            129          335         95        860
Average liabilities ($
billions)                       218             96          232        262        808

Canadian banking

Third quarter 2015 versus third quarter 2014

Net income attributable to equity holders was $863-million, a decrease of $463-million or 35 per cent. Adjusting for the prior year's gain and contribution from CI Financial Corp. (CI) and changes in the Canadian tax legislation, net income attributable to equity holders increased $112-million or 15 per cent compared with the same period last year. Good growth in assets and deposits, an increase in the net interest margin and higher non-interest income were partially offset by increased non-interest expenses and provision for credit losses.

Third quarter 2015 versus second quarter 2015

Net income attributable to equity holders increased $34-million or 4 per cent, mainly due to a longer quarter and growth in both assets and deposits, partly offset by higher non-interest expenses.

Year to date third quarter 2015 verus year to date third quarter 2014

Net income attributable to equity holders was $2,507-million, a decrease of $471-million or 16 per cent. Adjusting for the prior year's gain and contribution from CI and changes in the Canadian tax legislation, net income attributable to equity holders increased $228-million or 10 per cent driven by growth in assets and deposits, an increase in the net interest margin and non-interest income. Partly offsetting were higher non-interest expenses and provision for credit losses.

International banking

Third quarter 2015 versus third quarter 2014

Net income attributable to equity holders was $485-million, an increase of $49-million or 11 per cent. The quarter's results reflected strong loan growth across Latin America, higher fee income and contributions from the bank's investments in associated corporations, and the positive impact of foreign currency translation. This quarter, the bank had small acquisitions in Peru and Chile. These acquisitions were insignificant to net income this quarter, but did impact the various income and expense categories.

Third quarter 2015 versus second quarter 2015

Net income attributable to equity holders increased $38-million or 9 per cent due to the impact of a longer quarter, growth in fees and a higher contribution from the bank's investment in Thanachart Bank.

Year to date third quarter 2015 versus year to date third quarter 2014

Net income attributable to equity holders increased by $37-million or 3 per cent to $1,349-million. Results reflected good loan growth, higher fees and contributions from the bank's investment in associated corporations, partially offset by higher provisions for credit losses. The positive impact of foreign currency translation was mostly offset by the impact of Venezuela currency devaluation, and lower benefits from the credit mark on the acquired portfolio in Banco Colpatria.

Global banking and markets

Third quarter 2015 versus third quarter 2014

Net income attributable to equity holders was $375-million, a decrease of $92-million or 20 per cent, compared with very strong results last year. This was driven mainly by a lower contribution from investment banking and Asia lending, as well as higher provisions for credit losses. These results were only partly offset by stronger results in the equities and fixed income businesses and the positive impact of foreign currency translation. The prior year also included an investment banking gain and a securities gain in U.S. lending.

Third quarter 2015 versus second quarter 2015

Net income attributable to equity holders decreased $74-million or 16 per cent. Stronger results in Canadian and U.S. lending were more than offset by weaker results in capital markets, precious metals and investment banking.

Year to date third quarter 2015 versus year to date third quarter 2014

Net income attributable to equity holders decreased $63-million or 5 per cent. This was driven by lower contributions from investment banking, precious metals and Asia lending, and by a lower securities gain in U.S. lending. This was partly offset by stronger results in equities and foreign exchange, and from the positive impact of foreign currency translation.

Other

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

Net interest income, other operating income and the provision for income taxes in each period include the elimination of tax-exempt income gross up. This amount is included in the operating segments, which are reported on a taxable equivalent basis. The elimination was $108-million in the third quarter, compared with $89-million in the same period last year and $117-million last quarter.

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

Third quarter 2015 versus third quarter 2014

Net income attributable to equity holders was unchanged at $72-million. Higher net gains on investment securities, impact of higher foreign currency translation benefits and lower taxes were partly offset by lower contributions from asset/liability management activities and higher expenses.

Third quarter 2015 versus second quarter 2015

Net income attributable to equity holders was $72-million, compared with $32-million. The increase was mainly due to higher net gains on investment securities and higher foreign currency translation benefits. Partly offsetting were higher expenses and an increase in taxes this quarter.

Year to date third quarter 2015 versus year to date third quarter 2014

Net income attributable to equity holders was $147-million, compared with $117-million. Higher net gains on investment securities and lower taxes were partly offset by lower contributions from asset/liabilities management activities and higher expenses.

Provision for credit losses

Third quarter 2015 versus third quarter 2014

The provision for credit losses was $480-million, up $82-million. The increase was primarily due to higher provisions in international banking retail, mostly from acquisition impacts, and Canadian banking retail portfolios driven by growth in relatively higher spread products.

Third quarter 2015 versus second quarter 2015

The provision for credit losses was $480-million up $32-million. The increase was primarily due to higher retail and commercial provisions in international banking, driven by asset growth and acquisitions.

Year to date third quarter 2015 versus year to date third quarter 2014

Provision for credit losses was $1,391-million, up $262-million. The increase was primarily due to higher international banking retail provisions, mostly from acquisition impacts, and Mexico. Canadian banking retail provisions were also higher, driven by growth in relatively higher spread products partly offset by lower provisions in Canadian banking commercial portfolios.

Capital ratios

The bank's common equity Tier 1 ratio decreased by approximately 20 basis points this quarter to 10.4 per cent primarily due to the impact of the acquisitions of Cencosud's financial services business in Chile and the operations of Citibank Peru.

The bank continues to maintain a strong capital position. As at July 31, 2015, the CET1, Tier 1, total capital and leverage ratios are well above Basel III all-in minimum requirements.

Common dividend

The board of directors, at its meeting on Aug. 27, 2015, approved a dividend of 70 cents per share, an increase of two cents per share. This quarterly dividend is payable to shareholders of record as of Oct. 6, 2015, on Oct. 28, 2015.