The International Monetary Fund said the Philippines' financial system appears resilient to a broad range of macroeconomic risks, helped largely by the considerable strengthening of local banks that dominate the financial sector.

"Since the Asian crisis of the late 1990s, a benign economic environment, bank restructuring and consolidation, and the shedding of non-performing assets have all helped improve bank soundness," the IMF said in an update to its Financial System Stability Assessment for the Philippines, released Monday.

"Partly as a result, the impact of the current global crisis has thus far been milder than initially expected. Although macroeconomic risks remain elevated, the banking system is well-capitalized and liquid, and asset quality is generally high," the IMF said.

Banks account for about two-thirds of the Philippine financial system's assets.

Stress tests suggest that the 10 largest banks are resilient to a wide range of credit, market and liquidity risks, the IMF said.

Still, it said that asset quality of thrift, cooperative and rural banks is weaker and provisions are low.