UBS posted a rise in second-quarter net profit on Tuesday, as it booked a 254 million Swiss franc ($280 million) charge to help settle claims concerning German tax evaders.
The Zurich-based bank reported quarterly net profit of 792 million Swiss francs ($875 million), compared to 690 million Swiss francs a year ago, when results included a $885 million settlement with the U.S. housing regulator over the mis-selling of mortgage-backed bonds. Tuesday's result beat expectations in an analyst poll conducted by Reuters, which averaged 774 million Swiss francs.
Sergio Ermotti, the group CEO at UBS, praised the results telling CNBC that they proved "our business model works in tough market conditions."
"They're a solid set of results across all businesses, in all regions," he said.
Read MoreUBS wealth arm assets near $2 trillion 'milestone'
Shares in the bank rose at the session open but fell back to trade lower by 0.4 percent by 8:30 a.m. London time. Analysts at Citi said that overall the results were broadly in line with their expectations but noted that the bank had a cautious outlook for the quarter coming up with geopolitical risks and underlying challenges likely to remain.
Back in late 2012, German state prosecutors in the city of Bochum begun an investigation into UBS clients on suspicion of personal tax evasion. UBS were just one of several Swiss banks that formed part of the probe and it took the opportunity in its latest quarter to finally settle with the German authorities and resolve the issue.
The bank said on Tuesday that the settlement included a payment of approximately 300 million euros, and it also booked a provision of approximately 120 million relating to this matter in its second-quarter results. It added that 95 percent of its German clients had now provided evidence of tax compliance or completed the bank's voluntary compliance program.
Read MoreDeutscheBank second-quarter profit up 16%
Commenting on the proceedings, the bank said in a statement that the "resolution of this matter is a significant step allowing UBS to move forward in this important market." UBS bank added that it expected to have all of its German clients to have come clean by the end of the year.
The Swiss lender also added that it was cooperating with inquiries from U.S. regulators concerning the operation of its alternative trading systems (ATS) also known as "dark pools". The organizations named were the Securities and Exchange Commission, the Financial Industry Regulatory Authority and the New York Attorney General.
UBS said that it was also one of several defendants in New York lawsuits that allege that it favored high-frequency trading firms with its equities order-handling at the expense of other market participants.
UBS is often recognized as being the largest wealth manager in the world in terms of assets but the bank has recently seen a squeeze on margins and Tuesday's results proved to be the same. The gross margin on invested assets was down 3 basis points to 84 basis points, it said, but UBS said that the unit was performing resiliently in the current market conditions.
"Volatility in the market is putting pressure on transactions and transactions were down substantially on a quarter on quarter basis. But despite that our pretax profit was very solid," Ermotti told CNBC.
Clarification: UBS has booked a charge of 254 million Swiss francs not euros, as reported earlier by some news agencies.