FTSE 250 challenger bank Metro Bank said it is on track to turn its first profit this year, after its losses shrank by three quarters in 2016.

Metro Bank reported an underlying loss before tax – which excludes costs related to its IPO and impairment of some assets – of £11.7m, down from £46.6m in 2015.

Statutory loss before tax was higher, at £17.2m, but still down 70 per cent compared to the previous year.

The company, which focuses on in-store banking across London and the south of England, increased its net lending by 66 per cent over the year, to £5.9bn. Total deposits rose by 56 per cent to £7.95bn.

While deposit and lending growth slowed in the second half, the company maintained its revenue growth of 62 per cent over the whole year, bringing total revenues to £195m.

Craig Donaldson, Metro Bank chief executive, said:

It’s been another great quarter and I’m delighted with our full-year performance. We continue to show significant growth across lending, deposits and customer account numbers with continued integration of technology across all our channels, including stores, creating a compelling service experience for our retail and business customers.

The bank said that it had achieved quarter on quarter profitability in 2016 and expected to deliver a full year of profitability in 2017.

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