Goldman Sachs put the brakes on bonuses in the fourth quarter, propelling the bank’s profits to their highest level in three years and defying the tepid global economy and new regulations.

The bank cut pay by 11 per cent to $1.98 billion in the quarter, helped by hundreds of job cuts. Remuneration as a percentage of Goldman’s revenues fell to 21 per cent for the period, one of the lowest ever ratios since the bank went public in 1999.

Earnings at Goldman and JPMorgan Chase both trumped analysts’ forecasts, with Goldman’s profits for the fourth quarter almost tripling to $2.8 billion, thanks to lower expenses, modestly improved markets and higher asset prices that helped boost the value of the bank’s own investment portfolio.

JPMorgan took less drastic action for bonuses, with the level flat for the fourth quarter compared with the same period last year, but halved its chief executive’s 2012 bonus to $10 million. (Copyright The Financial Times Limited 2013)