India's largest housing finance company, HDFC Ltd, reported a 27.5% drop in its standalone net profit to Rs 2,870 crore in the fiscal second quarter ended 30 September.

The drop in profit was due to the sale of its stake in Gruh Finance to Bandhan Bank in the year-ago period and loss on sale of investment this quarter.

"After adjusting for the sale of investment and dividend income received last year, the housing finance company's net profit would have been 27% higher over the previous year," HDFC vice chairman and managing director Keki Mistry said during a media interaction.

The company's net interest income rose to Rs 3,547 crore while revenue from operations fell 13% to Rs 11,728 crore due to a loss of Rs 61 lakh on the sale of investment. In the year-ago period the company made a profit of Rs 1,627 crore from the sale of investment. Revenue from operations rose to Rs 13,017.68 crore from Rs 12,990.29 crore a year ago.

HDFC saw its advances grow 10% from the year-ago period to Rs 5.4 lakh crore. Individual home loans grew 9% and non-individual loans by 13%.

"During the quarter ended 30 September 2020, individual loan showed a faster growth with home loan applications growing by 12% and approvals grew by 9% compared to the corresponding quarter of the previous year. Individual disbursements during the quarter were at 95% levels of the previous year," HDFC said.

"On a sequential basis, the demand for home loans led to a higher growth of this segment while the non-individual book contracted. The disbursements in October were the second highest in the company's history," Mistry said after releasing the results.

Asset quality continued to be stable. HDFC's bad loan ratio fell 6 basis points from 30 June to 1.81% in the second quarter. Accounting for the Supreme Court's instructions on asset classification, the total gross non-performing asset (NPA) ratio would be at 1.83%, the company said. Total provisions as on 30 September stood at Rs 12,304 crore. Loans worth Rs 7,977 crore were eligible for the asset classification benefit extended by the Reserve Bank of India (RBI).

But HDFC doesn't expect too many of its borrowers to seek deferment in repayment. Owing to Covid-19, lenders can now defer loan repayments by two years as part of a one-time restructuring scheme. HDFC shares closed 6.24% higher at Rs 2042.65 on the BSE.