Metro Bank eyes profit and stock market listing in 2016

* IPO expected in first half of next year

* Founder expects bank to make first profit next year

* Expects businesses to account for 60 pct of lending (Adds comments from chairman and founder Hill)

By Matt Scuffham

LONDON, July 23 (Reuters) - New British lender Metro Bank expects to make its first profit next year, supporting a planned listing on the London Stock Exchange (Other OTC: LDNXF - news) , its founder and Chairman Vernon Hill told Reuters.

Metro Bank opened in 2010 as Britain's first new retail bank for more than a century and has grown its deposit base and lending at a rapid rate. However, its investment in new branches and infrastructure has meant it has yet to make a profit.

"We expect to make a profit next year and our plan is to do an IPO (initial public offering) on the London exchange next year. We're not ready to commit to an exact date but I certainly expect it to happen in the first half of next year," Hill said.

Founded by U.S. entrepreneur Hill, the bank has been cited by some lawmakers as an alternative to Britain's 'big four' lenders - Lloyds Banking Group, Royal Bank of Scotland (LSE: RBS.L - news) , Barclays (LSE: BARC.L - news) and HSBC.

British lawmakers and regulators want to stimulate competition within the industry and the country's competition watchdog is investigating banking services for small businesses and individuals.

Metro Bank reported a loss of 8 million pounds ($12.5 million) in the second quarter of 2015 but said its total lending had passed 2 billion pounds for the first time while deposits had nearly doubled to 3.8 billion pounds.

"Our brand has got tremendous acceptance already. Even (Taiwan OTC: 6436.TWO - news) more surprising is that the commercial side of the business is slightly larger than our consumer side. There is very strong demand in all areas of commercial banking," Hill said.

Hill said more than half the bank's lending was now being made to businesses and he expected that to rise to about 60 percent in the long term.

($1 = 0.6405 pounds)

(Reporting by Matt Scuffham; Editing by Steve Slater and Pravin Char)