DUBAI (Reuters) - Qatar National Bank, the Gulf’s biggest bank by assets, on Tuesday reported a drop in annual profit of more than 16%, hit by $1.6 billion in impairments during a year when the region’s economy was affected by the coronavirus outbreak. Gulf banks have faced a slowdown in business and a rise in loan impairments as Covid-19 hit the region. The outlook for 2021 is uncertain due to the protracted nature of the economic recovery. QNB reported a net profit of 12 billion Qatar riyals ($3.30 billion) in 2020, it said in a statement, down from 14.4 billion riyals in 2019. The profit was slightly above the mean forecast of 11.7 billion riyals by seven analysts, based on Refinitiv data. “Considering the long-term financial impacts of Covid-19, QNB Group decided to set aside an additional 5.8 billion (riyals) in respect of loan loss provisions a a precautionary measure, which affected the net profit for the year,” the bank said. In 2019, impairments were about 3.2 billion riyals. Qatar’s economy is expected to grow by 3% this year as an easing of a three-year-old regional dispute will help trade, tourism, and logistics, Standard Chartered said on Jan. 6, revising its previous 2.1% growth estimate. Saudi Arabia and its Arab allies agreed earlier in January to end a boycott imposed in mid-2017 over allegations that Qatar supports terrorism, charges it has denied. Qatar’s economy is projected to have contracted by about 2.5% in 2020, the International Monetary Fund has said. Despite the pandemic, QNB said its total assets increased to a record 1 trillion riyals, driven by a 7% rise in loans and advances. QNB improved its cost to income ratio from 25.9% to 24.3% which the bank said is considered one of the strongest ratios among the large financial institutions in the Middle East and Africa region. (The story refiles to fix conversion rate in third paragraph.)