Metro Bank is on track to post its first ever annual profit this year after narrowing losses in 2016 thanks to a surge in new customers.

It revealed its second quarter in a row of profits, at £1.5 million in the final three months of 2016, helping annual underlying pre-tax losses improve by 75% to £11.7 million.

Metro Bank - which launched in 2010 - signed up a record 260,000 customers over the year, to take its total to 915,000. It is now opening around 1,000 new accounts a day.

Founder Vernon Hill said the response of the British public had "exceeded our expectations", and he said the "best is yet to come".

He added: "Our goal is to create a legendary, emotional brand by creating fans who join our brand, remain loyal and bring their friends."

Metro Bank has around 100,000 business customers, but chief executive Craig Donaldson said he wants this to rise under aims to help "under-served" small businesses.

He cheered plans revealed last week for Royal Bank of Scotland (RBS) to set up a £750 million fund to boost competition in the sector and help support "under-served" firms.

He told the Press Association plans to seek EU approval to scrap rules requiring RBS to sell its Williams & Glyn branches and instead launch a series of measures to help challengers would benefit the group and the wider sector.

He said: "Anything that resolves the Williams & Glyn saga is a good thing for UK plc and anything that drives competition in the sector is a good thing."

The Treasury last week revealed it was in talks with the EU over an alternative plan for RBS to appease rules on state aid, which would include setting up a fund that challenger banks can access to increase their business banking capabilities, funding the cost of business customers switching from RBS to other banks and allowing other lenders to use its branch network.

Mr Donaldson said: "Businesses are under-served in the UK.

"We want to continue to bring on board more business customers and I'm very interested in seeing more detail (of the RBS plan)," he added.

He confirmed the group is set to increase its number of branches from 48 to around 60 this year and around 110 by 2020.

He ruled out any plans to acquire troubled rival the Co-operative Bank, which was put up for sale earlier this month, saying the group "does not want to take on any legacy that would slow us down".

Metro Bank employs 2,500 staff after taking on another 500 in 2016.