The largest domestic banks, in order of size, are Metropolitan Bank and Trust (Metrobank), Bank of the Philippine Islands, Equitable-PCI Banking Corporation, Land Bank of the Philippines, Philippine National Bank, Development Bank of the Philippines, Rizal Commercial Banking Corporation, Banco de Oro, Allied Banking Corporation, and China Banking Corporation.
There also are 32 other universal and commercial banks. Four of the banks are owned or controlled by the government: the Land Bank of the Philippines, the Philippine National Bank, the Development Bank of the Philippines, and the Al-Amanah Islamic Bank. In addition, the banking sector includes 93 thrift banks (savings and mortgage banks, stock savings and loan associations, private development banks, and micro-finance institutions) and 771 rural banks. The universal and commercial banks and the largest thrift banks have licences to operate foreign-currency deposit units.
Foreign banks provide competition to local banks and are active in investment banking, asset management, and foreign-exchange and derivatives trading. Although they have a small market share and branch networks are not extensive, the expertise and reputation of the foreign banks attract customers.
The banking sector was relatively undamaged by the Asian financial crisis of 1997–98, and since 2001 asset quality has improved. In July 2005, nonperforming loans declined into the single digits (9.3 percent), half the peak level (18.8 percent) recorded in October 2001. This progress reflects the positive impact of the Special Purpose Vehicle Act of 2002, which provided incentives to financial institutions to reduce non-performing assets. Another trend in commercial banking is toward consolidation and restructuring.
The capitalization of the stock market is still modest, but it is growing rapidly off a low base. At the end of 2005, total stock market capitalization reached US$113 billion, up 25 percent from the previous year. During 2005, initial public offerings reached their highest level since the Asian financial crisis in 1997–98: US$1.06 billion. However, fewer than 1 percent of Filipinos invest in the stock market. Filipino investors generally prefer the bond market, which they regard as safer, and foreign investors also lack confidence in the stock market. The most important index, the Philippine Composite Index (PHISIX), consists of 34 listed issues, representing the country’s most important companies. The main financial centers are in Manila, the location of the Philippine Stock Exchange, and in Cebu.
The Philippines had 34 life insurance firms in 2005; this number includes foreign insurers that dominate the industry. Three foreign-owned life insurers and four joint-venture (foreign and domestic) life insurers enjoyed a combined market share of about 60 percent. The Philippine American Life Insurance Company is the largest life insurance issuer with a market share of 23.6 percent.