Bank of Nova Scotia - 4th Quarter & Final Results

RNS NUMBER 1773r
BANK OF NOVA SCOTIA
26 November 1997


For further information: Mr. Robert Chisholm
Vice-Chairman
[phone]

Scotiabank announces 1997 results

TORONTO - Scotiabank today reported record net income of $1,514 million for the
year ended October 31, 1997, up $445 million or 42% from a year earlier.
Earnings per share for the year were $5.91, up from $4.08 last year; return on
equity was 20.2%, up from 15.8%; and return on assets was 0.85%, up from 0.67%
last year.

The Bank's 1997 net income was affected by several unusual items, including a
$250 million ($141 million after tax) restructuring charge relating to the
integration of National Trust; the reversal into income of $500 million ($290
million after tax) of the Bank's country risk provision; gains of $144 million
($80 million after tax) on the sale of certain non-core businesses; an increase
in the general provision of $175 million ($100 million after tax); and
higher-than-average gains on the sale of investment securities.  Excluding these
and some other unusual items, income would have been $1,223 million, a 14%
increase over last year. Return on equity would have been 16.4% and earnings per
share would have been $4.72.

Net income for the fourth quarter was $533 million, up from $283 million in the
final quarter of last year. Return on equity was 26.3%, compared to 16.0%, and
return on assets was 1.09%, up from 0.69% last year. Earnings per share during
the quarter were $2.10, up from $1.08 for the same period last year. Excluding
the unusual items referred to above, the fourth quarter income would have been
$319 million, or $1.23 per share, return on equity 16.2% and return on assets
0.65%.

An increase in the quarterly dividend of three cents per common share was
approved by the Board of Directors at today's meeting, raising the quarterly
dividend to 40 cents, payable on January 28, 1998, to shareholders of record as
of the close of business on January 6, 1998.

"Favourable economic conditions in Canada and Scotiabank's diversified earnings
base contributed to our strong performance in 1997, generating solid returns for
our shareholders, including the many Canadians who directly, and indirectly
through pension and mutual funds, own Scotiabank shares," said Peter Godsoe,
Scotiabank's Chairman and CEO. "Scotiabank's 38,600 employees benefited from our
strong performance, as did our customers and suppliers. And governments at all
levels benefited from the $1.2 billion in taxes we paid in 1997."

"Fiscal 1997 was a year of achievement for Scotiabank," Godsoe said. "Each of
our four main business lines contributed to our successful performance, and we
made a number of key strategic investments that position the Bank for strong
long-term growth."

Godsoe noted that the Bank's Corporate Banking Division had a record year, due
to very strong demand for bank loans among major corporations and Scotiabank's
continued leadership in loan syndication, especially in Canada, the U.S. and
the U.K. Investment Banking also had an exceptional year, due to above-average
securities gains and a record performance by Scotia Capital Markets.

"In corporate and investment banking, we are taking a global view," Godsoe said.
"New initiatives such as our proposed acquisition of London-based Mocatta
Bullion and Base Metals, one of the world's leading metals and bullion banks,
and building our global wholesale business, particularly in high-potential
markets where we already have operations, will contribute significantly to
future core earnings."

"In Canada, we strengthened our most important franchise -- retail and
commercial banking -- through the acquisition of National Trust," Godsoe said.
"In addition to increasing our market share in personal deposits and loans,
mutual funds and mortgages, the acquisition expanded our personal trust
operations, improving our ability to meet the full range of our clients'
financial needs. This is a critical long-term goal for Scotiabank, along with
ensuring that our customers can access the services they need through integrated
technology-based delivery channels. The launch of our PC internet banking and
discount brokerage trading service was another important part of this strategy."

Godsoe noted that during 1997, lending in the Bank's domestic operations was up
significantly, particularly in mortgages, which increased by $2 billion during
the year and in loans to small- and medium-sized businesses, which rose by $1
billion. Shifting customer preferences contributed to growth of 38% in the
Bank's Scotia Excelsior mutual funds to $7 billion at the end of fiscal 1997.
There was also significant growth in customer demand for electronic payment
services. Overall, these developments fuelled a 28% increase in the net income
of the Bank's Canadian Retail and Commercial Banking Division.

Internationally, the Bank recorded solid results in most of its operations. The
Bank continued to broaden its global reach with new investments in Banco
Ahorromet in El Salvador and in Banco Sudamericano in Peru. It signed several
letters of intent, for an investment in Banco del Caribe in Venezuela and in
Bank Arya in Indonesia and for an increase to 100% ownership in Banco Quilmes
in Argentina, which are subject to regulatory approval. It also announced plans
to open a fourth branch in India and returned to Lebanon after a 12-year
absence.

"As Canada's most international bank, we recognize that economies in different
parts of the world experience difficulties from time to time, as is currently
the case in Asia," Godsoe said. "However, we view our investments as
opportunities for growth over the longer term. We continue to believe that
prospects for future growth in the Asia-Pacific and Latin America regions are
very positive.

"We are a successful multinational company, creating opportunities, benefits and
stability for many Canadians," Godsoe concluded.

PERFORMANCE HIGHLIGHTS

Diversified income: Net income for 1997 from each of the Bank's four main
business lines was as follows:

Domestic Banking              $520 million
Corporate Banking             $357 million 
Investment Banking            $401 million 
International Banking         $434 million

Net interest income in 1997 was $3.7 billion, an increase of $363 million or
11% over last year, notwithstanding a slight compression in the interest margin.
Growth in average assets of 13%, which included gains in most categories of
loans and securities, was the primary factor contributing to the higher net
interest income.

Other income totalled $2.68 billion, an increase of $675 million or 34% over
last year. Excluding the gains on the sales of certain non-core businesses,
gains on the sale of investment securities and the contribution of $29 million
from National Trust after the acquisition, the increase was a strong 14%.
Increased customer demand for electronic banking services, especially direct
debit, contributed to the increase. Loan fees rose 19%, reflecting the Bank's
strength in structuring and syndicating wholesale credits. Increased volume of
retail brokerage and underwriting fees resulting from the active market
contributed to a 23% improvement in investment banking fees.

Non-interest expenses, at $4.06 billion, grew by 26% in 1997. Performance-based
compensation, higher business volumes, large technology expenditures and
restructuring charges relating to the integration of National Trust were the
chief factors behind this growth. Personnel expenses were up 15% in 1997. About
half of the increase came from higher performance-based compensation. The
largest contributor to such payments was Scotia Capital Markets, where the
increase in performance-based compensation was tied directly to the strong
growth in revenues.

The Bank's productivity ratio - non-interest expenses as a percentage of total
revenues - was 62.4%. Excluding the unusual items, the productivity ratio was
better than the Bank's target of 60%.

Net impaired loans declined by 20% in 1997 to $593 million. This occurred
notwithstanding the inclusion of $137 million in net impaired loans of National
Trust. Gross impaired business loans increased during the year, partly due to an
increase in Thailand. With the financial difficulties in Thailand, the Bank
classified $172 million in loans as impaired and established specific provisions
of $134 million against these accounts.

Specific provisions for credit losses were $360 million, a decline of $20
million from 1996. During 1997, the Bank also added $175 million to its general
provision. The combined amount of $535 million was offset by a reversal of
$500 million of the country risk provision, resulting in a net charge to the
income statement of $35 million.

As part of its regular review of its loan loss provisions, in 1997 the Bank, as
mentioned above, reversed $500 million of its country risk provisions into
income. These provisions were established in the late 1980s against loans to
certain emerging market countries. Since then, almost all of these designated
emerging market (DEM) countries have restructured their debts and improved their
economic performance. After this reversal, the Bank still had a surplus of
market over book value of $417 million on the DEM portfolio.

Capital funds reached $14.6 billion at October 31, 1997, an increase of $3.6
billion or 32% from 1996, reflecting the Bank's active management of its capital
position. Tier 1 capital rose by $1.6 billion to $9.4 billion, with the largest
part of the addition resulting from a substantial increase of $1.1 billion in
retained earnings. In addition, $335 million was added to common shareholders'
equity because of the new shares issued in partial payment for National Trust.
Tier 1 capital growth was enhanced by the issuance of $489 million of new
non-cumulative preferred shares, including $250 million in Scotia BOOMS, a new
form of Tier 1 capital introduced by Scotiabank in the fourth quarter.

Tier 2 capital rose by $2.3 billion to $4.8 billion, reflecting $1.9 billion in
new subordinated debentures and the $500 million general provision that the Bank
is now allowed to include in Tier 2 capital as a result of a new guideline by
the Office of the Superintendent of Financial Institutions. At year end 1997,
Scotiabank's Tier 1 capital ratio was 6.90%, versus 6.69% at October 31, 1996,
and the total capital ratio increased to 10.42% from 8.85% in 1996.

Total assets at October 31, 1997 were $195.2 billion, an increase of $29.9
billion or 18% from 1996. Of this increase, approximately $14.5 billion was due
to the acquisition of National Trust, while the remainder was due to good growth
in residential mortgages and business loans.


Performance Highlights

                                           For the three months ended

                              October 31          July 31           October 31
                                 1997(1)             1997                 1996

Net income ($ millions)             $533             $384                 $283

Earnings per share ($)             $2.10            $1.51                $1.08

Return on equity                   26.3%            20.3%                16.0%
Return on assets                   1.09%            0.85%                0.69%

Productivity ratio                 78.8%             54.8                58.8%


                                            For twelve months ended

                                               October 31           October 31
                                                  1997(1)                 1996

Net income ($millions)                             $1,514               $1,069

Earnings per share ($)                              $5.91                $4.08

Return on equity                                    20.2%                15.8%

Return on assets                                    0.85%                0.67%

Productivity ratio                                  62.4%                58.8%

Excluding unusual items in the year, the full-year adjusted income was $1,223
million, earnings per share of $4.72, return on equity of 16.4%, return on
assets of 0.68%, and a productivity ratio of 59.9%. Similarly, excluding the
unusual items, the Q4/97 adjusted income was $319 million, earnings per share
of $1.23, return on equity of 16.2%, return on assets of 0.65%, and a
productivity ratio of 59.7%.


Consolidated Statement of Income
Scotiabank

              For the three months ended      For the twelve months ended 

($ millions)        October 31   July 31   October 31   October 31   October 31
                          1997      1997         1996         1997         1996

Interest income
Loans                   $2,218    $1,987       $1,962        $8,082      $7,881
Securities                 361       426          485         1,636       1,757
Deposits with banks        209       198          184           770         740
                    ___________________________________________________________
                         2,788     2,611        2,631        10,488      10,378
                    ___________________________________________________________

Interest expense
Deposits                 1,532     1,420        1,433         5,714       5,969
Subordinated debentures     79        65           53           260         214
Other                      221       202          232           797         841
                    ___________________________________________________________
                         1,832     1,687        1,718         6,771       7,024
                    ___________________________________________________________

Net interest income        956       924          913         3,717       3,354
Provision for credit
  losses (reversal)       (406)       88           95            35         380
                    ___________________________________________________________

Net interest income
 after provision for
 credit losses           1,362       836          818         3,682       2,974
                    ___________________________________________________________

Other income

Deposit and payment
  services                 141        138         128           531         499
Investment management
  and trust                 70         59          63           250         230
Credit fees                106        101          85           395         333
Investment banking         239        209         157           847         689
Net gain on
  investment securities     64        170          19           403         129
Other                       45         34          38           257         128
                     __________________________________________________________
                           665        711         490         2,683       2,008
                     __________________________________________________________

Net interest and
  other income           2,027      1,547       1,308         6,365       4,982
                     __________________________________________________________

Non-interest expenses
Salaries                   543        478         442         1,973       1,702
Pension contributions
  and other staff
  benefits                  54         61          55           229         208
Premises and equipmenmt,
  including depreciation   194        191         174           778         664
Other                      257        181         189           829         663
Restructuring costs        250         -          (20)          250         (20)
                      _________________________________________________________
                         1,298        911         840         4,059       3,217
                      _________________________________________________________

Income before the
  undernoted:              729        636         468         2,306       1,765
Provision for income
  taxes                    188        245         176           758         655
Non-controlling
  interest in net
  income of subsidiaries     8          7           9            34          31
                      _________________________________________________________
Net income                $533       $384        $283        $1,514      $1,069
                      _________________________________________________________

Preferred dividends paid   $25        $24         $29           $99        $113
                      _________________________________________________________

Net income available to
  common shareholders     $508       $360        $254        $1,415        $956
_______________________________________________________________________________

Note:  Gains and losses on securities are now reported in Other income effective
the first quarter of 1997, whereas previously they were reported in Interest
income.

Certain comparative amounts in these financial statements have been reclassified
to conform with current period presentation.



Consolidated Balance Sheet Highlights

                                          As at
($ millions)                  October 31           July 31         October 31
                                    1997              1997               1996


Cash resources                   $18,174           $16,059            $14,737
Securities                        27,999            25,956             25,905
Asset purchased under resale
  agreements                       8,520            14,653              9,112
Loans                            115,765           102,250             95,621
Other assets(1)                   24,695            22,779             19,926
                          ____________________________________________________
Total assets                    $195,153          $181,697           $165,301
                          ____________________________________________________

Deposits - Personal              $59,239           $46,870            $47,768
         - Business and
           governments            56,928            52,542             44,981
         - Banks                  22,808            24,636             25,145
                          ____________________________________________________
Total deposits                   138,975           124,048            117,894

Other liabilities(1)              41,613            44,070             36,407
Subordinated debentures            5,167             5,106              3,251

Equity - preferred                 1,468             1,325              1,325
       - common                    7,930             7,148              6,424
                           ___________________________________________________
Total liabilities and equity    $195,153          $181,697           $165,301
______________________________________________________________________________

(1) In accordance with new accounting requirements issued by the Canadian
    Institute of Chartered Accountants, unrealized gains and losses on trading
    derivative instruments are reported separately in Other assets and
    Other liabilities respectively effective the first quarter of 1997, whereas
    previously they were netted and reported in either Other assets or Other
    liabilities.


Capital and Common Share Information

                                       As at
                                October 31        July 31            October 31
                                      1997           1997                  1996

Capital ratios
Tier 1                               6.90%          6.67%                 6.69%
Tier 2                               3.52%          3.31%                 2.16%
                             __________________________________________________
Total                               10.42%          9.98%                 8.85%
                             __________________________________________________
                          
Common shares
  outstanding (millions)           224.9          238.9                 237.4

Book value per share ($)           $32.38         $29.92                $27.05
Market value per share ($)         $62.15         $66.00                $42.25
_______________________________________________________________________________


                                       For the three months ended

                               October 31        July 31            October 31
                                     1997           1997                  1996

Common dividends paid
Total ($ millions)                    $91            $88                   $81

Per share ($)                       $0.37          $0.37                 $0.34
______________________________________________________________________________


END

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