The society says its secured loans subsidiary Nemo performed ahead of expectation delivering strong profits.
It says in a tight market for credit the business has improved the quality of its loan book and the returns achieved from it.
The society has capital ratios with a Tier 1 ratio of 13.34% , up from 12.49% in 2009.
It Peter Alan, estate agency business however had a more testing time with sales volumes reduced in a depressed market.
Peter Griffiths, group chief executive at Principality, says: “I am pleased to report a very credible performance in 2010.
“In the most testing of times we have further strengthened our balance sheet which remains in good shape with increased levels of capital, strong levels of liquidity and much improved profitability.
“During the year we attracted 52,000 new customers and savings balances broke the £5bn barrier for the first time in our history, securing Principality’s place as one of the most popular and trusted brands on the high street.”