DESPITE RETURNING to profitability last year, the finance arm of Friends First was nursing total accumulated losses of €87.2 million at the end of 2010.

In 2009, Friends First Finance shut down its new lending activities and reported an aggressive loan impairment charge of €100.5 million. The latest accounts filed for the company suggest that the bulk of bad debt provisions have already been made, as the impairment charge in 2010 was a much reduced €1.1 million.

This lower impairment provision meant that the company moved from a pre-tax loss of €93.6 million in 2009 to a €5.8 million pre-tax profit last year.

The company was established in 1997 and dabbled in different areas of retail consumer lending, before positioning its business predominantly in equipment and motor finance.

However the company was badly hit by the credit crunch and in 2009 Friends First announced the closure of the unit with the loss of 98 jobs on a phased basis.

At the time, it said the business would be wound down over five to seven years.

In 2010, staff numbers were cut from 75 to 45.

The company is now focused primarily on the administration and collection of its loan book and its directors said “significant progress” had been made in this area. Its loan portfolio was reduced from €484.4 million to €330.1 million during 2010.

The directors said they envisaged it would complete the collection of loans within six years.

However Friends First’s loan pursuit policy has come in for criticism. In October 2010 a High Court judge described moves by the company to pursue loans issued by Friends First Finance by petitioning for the borrower’s bankruptcy as “fairly draconian”.

During 2010, the unit restructured all of its subordinated loans, €172 million, into preference shares held by its ultimate parent Eureko.