Pre-tax profits dropped to £49m from £53.5m in 2014.
But the Cardiff-based society - the largest in Wales - said it had helped 3,500 first-time buyers onto the housing ladder, up by 1,200 on the previous year.
It also warned 67 workers at its Nemo secured loans business that they were at risk of redundancy.
It has been trying to offload Nemo and said it would no longer take on any new customers.
However, the building society said it believed it could find jobs for many of the staff within its 1,000 strong workforce.
Meanwhile, Principality, which is the sixth biggest society UK-wide, said mortgage lending to home-buyers had passed the £5bn mark for the first time.
Graeme Yorston, group chief executive, said it had been "another strong 12 months".
He said the society would continue to respond to technological demands, which have included rolling out mortgage interviews on Skype and online appointment booking.
Underlying profit was £57.8m, up from £51.9m.
This included dealing with one-off issues like stopping new lending from its subsidiary Nemo, which provides secure loans on properties.
There has been speculation over recent years that Principality would look to sell this part of its business.
It will continue to manage accounts it currently has.
Mr Yorston said although Nemo had made a £14m profit, it did not want to "increase our participation in this market".
Looking ahead at economic prospects, he said he did not expect to see any rise in the official Bank of England base rate until 2017 and "when it does it is likely to be modest".

Paintings and Victorian marble statues held at Carbisdale Castle, a former youth hostel near Ardgay, have been valued at a total of ??500,000.
The art is to be sold at an auction in London next month.
Organisers of the petition on the website change.org want the works should remain in the local community.
They said because the castle and its contents were gifted to SYHA, the association should not be selling off the art to make a profit.
More than 700 people have signed the petition so far.
SYHA shut Carbisdale Castle in Sutherland four years ago because of rising repair costs.
A former stately home, it was known as Castle of Spite because of the part it played in a family feud. The property is also said to be haunted by a ghost called Betty.
SYHA said it would invest money raised from the sale of the castle's artworks in its network of youth hostels.
The 17 sculptures and 36 Italian and Scottish 19th Century paintings will be offered for sale at an auction in London on 20 May.
Auctioneers Sotheby's have put a combined value of ??500,000 on the art.
White marble sculptures from the 1800s to be sold include Andromeda by Florentine sculptor Pasquale Romanelli and Nymph at the Stream by Scottish artist David Watson Stevenson.
It will be the first time in more than a century that the Victorian sculptures have been put on the market.

He was travelling on a United Airlines flight from Rome to Chicago on Saturday that was diverted to Belfast International Airport.
The 42-year-old, who has dual US-Italian nationality, has also been charged with disruptive behaviour on board an aircraft and common assault.
He is due to appear before Coleraine Magistrates Court on Monday.
The plane resumed its journey on Sunday afternoon.
Principality Building Society has announced a dip in its profits for 2015, after a record the year before.
[NEXT_CONCEPT]
A petition has been started opposing the sale of artworks by the Scottish Youth Hostel Association (SYHA).
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A man is to appear in court charged with endangering the safety of an aircraft on a transatlantic flight.