The Principality's assets have topped �4bn for the first time

Chief Executive Peter Griffiths said the performance was down to the buoyant housing market during 2004 in Wales.

He said he believed there will be slower growth next year but the society estimated Wales would still see a 4% growth in house prices.

In December, the society announced plans to create 160 jobs.

The latest results show that the building society's total assets increased by �473m - a new record for the Principality - to stand at �4,051.5m.

I don't expect to see a crash - I think we might see some softening but by and large I think it will be business as usual Peter Griffiths

Gross mortgage lending for the year increased by 11% to �1,117m, bringing in a profit before tax of �18.9m. The society's reserves increased from �199.3m to �211.1m.

Mr Griffiths said: "I think the background was a very competitive year in terms of some of the regulatory change that some of the financial services players had to put together last year.

"That took our eye off the ball a little bit but, that said, we reach a couple of key milestones."

He said the key to the current figures was the "very strong performance" of the Welsh housing market.

"On the one level for us, [it was] quite an easy market for us to do business in. House price growth was very high again."

More first time buyers were tempted late in 2004, the Principality said

He said its figures showed that more first-time buyers had been tempted by the market in the fourth quarter of 2004, which he said was "good news".

And Mr Griffiths talked down the prospect of a crash in house prices, although he admitted that no-one had a "crystal ball" on the issue.

He said: "I think we will see a steady state in the housing market.

"I don't expect to see a crash. I think we might see some softening but by and large I think it will be business as usual but slower house price growth than before."

Broaden range of services

He said the Principality's three-year change programme was on target, and the society was set to launch a revised brand image on St David's Day. (1 March).

He added: "As a Welsh mutual, one of the best things we can do is create jobs and long term employment for people.

"We have created about 150 jobs over the last couple of years and we're set to create about another 150 following the acquisition of another Cardiff -based company."

That deal is the takeover of Loan Link, would allow the Principality to create its own finance company and broaden its range of services.

The Welsh Assembly Government has provided regional selective assistance support for the project.

The Principality currently has 51 branches in Wales and the English borders and is the 12th largest building society in the UK.