In 1973, Presidential Decree No. 264 created the Amanah Islamic Bank with an initial capitalization of 50 Million pesos. Intended to become a development bank, it invested 75% of its total loanable funds on providing, among others, reasonable medium and long-term credit facilities for the people of the Muslim-dominated provinces in Cotabato, South Cotabato, Lanao del Sur, Lanao del Norte, Sulu, Basilan, Zamboanga del Norte, Zamboanga del Sur and Palawan.


In 1974, Presidential Decree No. 542 retuned the direction of the Bank to adopt the "no interest principle" in Islamic banking and partnership principles. However, the lack of recognition and support of Islamic banking in the Country made the Bank less competitive in the predominantly conventional banking in the Country.


In 1990, the Bank became a Universal Bank through enactment of  Republic Act No. 6848, otherwise known as the Charter of Al-Amanah Islamic Investment Bank of the Philippines (AAIIBP), with an authorized capital stock of P1 billion consisting of 10 million common shares. Its mandate is primarily to participate in the socio-economic development of the Autonomous Region of Muslim Mindanao (ARMM) by promoting and utilizing Islamic banking, financing and investment in agricultural, commercial and industrial ventures in the ARMM.


By mid-1990, three (3) of its branches, Cotabato, Marawi and Jolo began accepting and transforming ordinary deposits into Islamic deposits. The other branches have been transacting both conventional and Islamic banking products, services and facilities. From 1990 to 2007, AAIIBP managed its operation with the support of the Bureau of Treasury.


On October 30, 2008, the Development Bank of the Philippines (DBP) obtained ownership of the 99.9% shareholdings by acquiring the shares of the National Government, SSS and GSIS. It was on November 14, 2007 when DBP approved the acquisition of AAIIBP and on July 16, 2008 it took over full control of AIIBP’s operation.


On October 22, 2009, the Monetary Board approved the Bank's 5-year Rehabilitation Plan, which focused on four corporate strategies (4Rs), namely, Recapitalization, Restoration of Financial Viability, Reorganization and Reforms Institutionalization. Under the Rehabilitation Plan, AAIIBP is allowed to continuously do both conventional and Islamic banking.


In November 2009, DBP, marking the partial completion of recapitalization strategy, infused Php1.0 billion capital to AAIIBP.