Bank of Nova Scotia (TSX: BNS, NYSE: BNS) is No. 3 among Canada’s Big Five banks but No. 1 in terms of expanding its operations beyond its solid domestic franchise.The bank’s earnings profile is diversified in terms of business lines and products as well as geography.

Bank of Nova Scotia–popularly known as Scotiabank–continues to expand its footprint, both geographically and within business lines, through organic growth opportunities as well as acquisitions.

It’s made over 30 acquisitions since 2007, including the CAD3.13 billion acquisition of ING Bank of Canada in August 2012 and the addition of a 51 percent stake in Colombia-based Banco Colpatria in January 2012 at a cost of just over CAD1 billion.

A diversified earnings base is Scotiabank’s primary strength, with solid distribution among its four operating units: Canadian Banking (33 percent), International Banking (25 percent), Global Wealth Management (19 percent), and Global Banking and Markets (23 percent).

But Scotiabank is also the most internationally diversified of Canada’s major banks, exposing it to attractive long-term growth prospects from emerging markets and providing diversification from the North American economic environment. It has a longstanding banking history in the Caribbean, strength in Mexico and operations in Central America, South America and Asia.

Total assets are up 27 percent since Oct. 31, 2011, the fastest pace among its domestic peer group. But Scotiabank has also been able to maintain solid returns during this period of expansion, with an average adjusted return on common equity of 17.4 percent for the five-and-a-half years beginning in 2008.

And it’s also been able to maintain asset quality, as its solid Canadian franchise has been complemented by provisions for bad loans that have risen in line with portfolio growth in Latin America.

Scotiabank generated a 10.9 percent increase in earnings during the first six months  of fiscal 2013, with strong earnings growth generated across its four core operating segments and 43 percent of the rise in earnings specifically attributable to acquisitions.

Canadian Banking generated the largest increase in earnings over the period, with earnings up 19.9 percent, as it benefited from the ING acquisition. Organic growth was particularly strong in consumer auto loans, which saw a 23 percent increase, and in residential mortgage lending, where it posted growth of 8 percent.

International Banking earnings grew 8.2 percent, with strong asset growth in Latin America, particularly with the acquisitions of Banco Colpatria and Crédito Familiar, and with higher contributions from associated companies, partially offset by a rise in provisions for credit losses.

Global Wealth Management delivered a 9.4 percent increase on higher assets under management and administration from favorable net sales, as well as improved capital markets, and from strong results in the insurance operation.

Global Banking and Markets posted 8.9 percent growth, primarily as a result of higher revenues in the fixed income and equities businesses, as well as across all of the lending businesses.

Strong cost-controls help it maintain reasonable profit levels even through periods of weak revenue, which favors Scotiabank relative to the rest of the Big Five in the current interest rate and economic environment. Scotiabank’s cost discipline has allowed it to maintain an average efficiency ratio of 55 percent over the past ten years, compared to an average of 66 percent for its Big Five peers.

In May 2013 Scotiabank announced that Rick Waugh will retire as CEO on Nov. 1, 2013. Brian Porter, the bank’s current president, will assume the CEO role, ensuring continuity.

Mr. Porter has extensive experience with the bank and has held a number of high-level roles across several of its operating units. A smooth transition is expected, with no shift in strategic direction anticipated as a result of the change.

Scotiabank has raised its dividend four times since the end of the Great Financial Crisis and is on track to boost it again when it announces fiscal 2013 third-quarter results on Aug. 27, 2013.

Scotiabank is well capitalized as measured under Basel III capital ratios, including a Common Equity Tier 1 (CET1) ratio of 8.6 percent and a Tier 1 ratio of 10.7 percent as of April 30, 2013.

Its capital ratios exceed regulatory requirements of the Office of the Superintendent of Financial Institutions (OSFI), with a current minimum of 7 percent for the CET1, which will subsequently rise to 8 percent for Scotiabank by Jan. 1, 2016, at the latest, given the bank was named as one of the domestic systemically important banks within Canada.

Now yielding a healthy and stable 4.1 percent, Bank of Nova Scotia, a new addition to the CE Portfolio Conservative Holdings, is a buy under USD60.