UPDATE 1-Brazil's Bradesco profit jumps despite hit in insurance

(Updates with new outlook)

SAO PAULO, Aug 3 (Reuters) - Brazil's second-biggest lender, Banco Bradesco SA, on Tuesday reported a 63.2% rise in its second-quarter profit on lower loan-loss provisions, despite a hit in its insurance unit by the pandemic.

Recurring net income, which excludes one-off items, came in at 6.319 billion reais ($1.22 billion), roughly in line with an estimate of 6.454 billion reais compiled by Refinitiv. Return on equity was at 17.6%.

Despite the higher profits, the bank's insurance business, which includes life and health insurance plans, was hurt by Brazil's brutal second wave of COVID-19 in the second quarter. Gains within this unit fell 58.3% to 1.574 billion reais.

The bank revised its full-year outlook for insurance results to a drop of between 15% and 20%. Previously, the bank was expecting growth between 2% and 6%. Bradesco's full-year outlook for its loan portfolio, fee income and loans losses were unchanged.

In the second quarter, loan-loss provisions plunged 60.8% from a year earlier, to 3.487 billion reais. Bradesco set aside 3.8 billion reais in the second quarter of 2020 for potential loan defaults stemming from the pandemic economic crisis, but losses have not materialized.

Debt repayment is occurring at higher-than-expected levels, amid a recovery in economic activity as vaccination rollout sped up.

Its 90-day default ratio came in at 2.5%, stable from the previous quarter.

Driven by a more optimistic economic outlook, Bradesco also extended more loans, mainly to consumers. Its loan book grew 9.9% from a year earlier and 3% in the quarter.

Profit was also helped by lower operating costs. ($1 = 5.1967 reais) (Reporting by Carolina Mandl; Editing by Leslie Adler and Lisa Shumaker)