(Bloomberg) -- Kotak Mahindra Bank Ltd. posted a fourth-quarter profit that missed analysts’ estimates as it set aside a higher amount of money to boost bad loan buffers. Shares dropped.

India’s fourth-largest private lender’s net income was 16.8 billion rupees ($227 million) in the three months to March compared with 12.7 billion rupees a year ago. That lagged an 18.7 billion rupees estimate by eleven analysts at a Bloomberg survey.

The bank founded and run by the world’s richest banker Uday Kotak saw bad loans rise last year as the economic fallout of the coronavirus pandemic eroded borrowers’ repayment ability. This year a second wave, more dangerous than last, could derail a nascent economic recovery and push up bad loans in the banking system further as India battles a record number of daily infections and deaths globally.

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Shares of the Mumbai-based lender dropped as much as 3.7% after the earnings were reported, before paring some of the losses. Bankex Index was down 2% at 1:34 pm in Mumbai.

Kotak Mahindra Bank’s gross bad-loan ratio was 3.25% at the end of March compared with 2.26% in the previous quarter. Banks had to mark their delinquent loans after a top court reversed its relaxation that had barred lenders from classifying debt as soured. The bank’s provisions were at 11.8 billion rupees in the March quarter compared with 4.2 billion rupees in the previous quarter.

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