UBS is in advanced talks with the US Department of Justice to settle allegations of foreign exchange market rigging.

The news comes as Switzerland's biggest bank posted its highest quarterly profit in nearly five years. 

A settlement in the probe would bring UBS a step closer to drawing a line under a string of investigations looking at how traders allegedly manipulated the $5 trillion a day foreign exchange market. 

"Discussions with DoJ have continued and are at an advanced stage, although no agreement has been reached on the form of a resolution," Zurich-based UBS said. 

Regulators have already fined six major banks including UBS a total of $4.3 billion for failing to stop traders from trying to manipulate the forex market. 

Sources told Reuters last week the DoJ and five major banks including UBS were on course to reach multi-billion dollar agreements as soon as the second half of May. 

UBS lowered its litigation reserves to 2.7 billion francs from 3.05 billion and said it believed reserves were adequate to deal with the forex probe, but flagged "substantial uncertainty" surrounding the outcome. 

UBS also said net profit for the first three months of 2015 reached 1.98 billion francs ($2 billion), an 88% year-on-year rise and well above the 1.1 billion analysts had on average forecast, a Reuters poll showed. 

The result comes despite the strength of the franc, sparked by a decision by Switzerland's central bank to abandon a cap on the currency. 

Zurich-based UBS's figures were boosted by the highest profits from its wealth management businesses since 2008. The unit won 19 billion francs in net new money, a key indicator for future revenue. Analysts had forecast net new funds of 13.4 billion. 

The Swiss bank said it expects its wealth management businesses to continue to bring in net new money in the second quarter. 

Its investment bank, which runs a considerable foreign exchange trading arm, benefited in the quarter from increased volatility sparked by the shock central bank decision to end a cap on the franc against the euro.