The ratings on The Bank of Nova Scotia (Scotiabank) reflect our view of its market position as one of five dominant banks in Canada; well-established international growth platform; and track record of high and consistent earnings performance coupled with solid capital measures. A fairly stable Canadian retail and commercial loan portfolio to date also supports the business although credit costs, which we expect to remain manageable, are rising and we expect the international operations to further weaken asset quality. The increased risk associated with growing investments in developing and emerging markets and susceptibility to adverse global economic developments somewhat offset the strengths. In addition, the negative effect of currency translation on increasing foreign earnings has curbed profitability and capital, while
