(Reuters) - Large-cap U.S. banks such as Bank of America Corp , Citigroup Inc and PNC Financial Services Group Inc stand to gain from lower credit losses and the release of excess reserves, brokerage Sanford C. Bernstein said.

"Reserve release has been boosting EPS and while it likely fades, the tank doesn't look empty yet," analysts led by John McDonald said in a note to clients.

Reserve release as a percentage of earnings is likely to fall from around 22 percent of EPS at the large- and mid-cap banks in 2012 to about 10 percent in 2013 and about 1 percent in 2014, they said.

However, with low interest rates, high liquidity, tightened underwriting and lackluster new lending, credit costs should be able to stay lower for longer, which would help fuel continued reserve releases, the analysts added.

Bernstein analysts also expect net charge off rates to fall below historical average over the intermediate term, as banks benefit from an improving economy, cleaner books, and improved underwriting standards.

Bank of America is likely to benefit the most from the combined impact of lower charge offs and reserve releases, which are expected to constitute about 56 percent of the lender's adjusted annualized first-quarter 2013 earnings. They would be about 55 percent for Synovus Financial Corp and about 52 percent for Citigroup, the brokerage added.

(Reporting By Neha Dimri in Bangalore; Editing by Maju Samuel)

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