UPDATE 1-Brazil banks book $1.7 bln profit from VisaNet IPO

* Bradesco books 2 bln reais profit on VisaNet stake sale

* Banco do Brasil books 1.3 bln reais from stake sale

* Banks increase bad debt provisions by 2 bln reais (Recasts, adds details of offering)

SAO PAULO, June 30 (Reuters) - Brazilian banks Bradesco and Banco do Brasil booked pretax profits totaling 3.4 billion reais ($1.73 billion) from the record-setting initial public offering of credit card operator VisaNet.

Bradesco (BBDC4.SA), Brazil's second-largest private sector bank, said in a securities filing on Tuesday it will receive 2 billion reais from the sale of a 10.5 percent stake in VisaNet (VNET3.SA), which will impact its second-quarter results.

Federally-controlled Banco do Brasil (BBAS3.SA) said in a separate statement its pretax profit from the sale of a 7.05 percent stake in VisaNet would reach 1.42 billion reais.

Bradesco retains a 28.76 percent stake in VisaNet, while Banco do Brasil has about 24 percent.

Shareholders including Bradesco and Banco do Brasil raised 8.4 billion reais from the VisaNet offering last week, the largest IPO ever in Brazil and the world's biggest in the past year.

VisaNet is the Brazilian affiliate of credit card network Visa Inc (V.N).

Bradesco also said it set aside 1.3 billion reais for bad debt in the second quarter "to provide support for eventual cyclical scenarios, with an increase in default rates and/or changes in the risk profile of the credit portfolio."

Brasilia-based Banco do Brasil will book 676 million reais in additional provisions above the minimum required by Brazilian banking regulators in the second quarter.

Bank lending in Brazil fell for a second straight month in May as banks, concerned over a spike in loan delinquencies, cut back on new loans.

Default rates, as measured by loans that have remained unpaid for at least 90 days, rose to 5.5 percent of total debt last month from 5.2 percent in April, reaching the highest level since September 2000. ($1=1.964 reais) (Reporting by Guillermo Parra-Bernal and Elzio Barreto; editing by John Wallace)