• Goldman made profits of $35m a day • US workers could get $700,000 bonus each • But Citigroup still hampered by consumer losses

The Wall Street bank Goldman Sachs is gearing up to pay huge year-end bonuses to its 31,000 employees after raking in quarterly profits of $3.19bn (£1.96bn), boosted by astute trading, resurgent stocks and a return to relative normality on the financial markets.

Goldman's profits of $35m a day for the three months to September were more than three times as much as the bank made during the same period in 2008. Under its policy of setting aside almost half of its revenue to pay its staff, the firm has built up a compensation fund of $16.7bn for the year to date – including $5.35bn set aside in the last quarter.

Barring a sudden slump in business in the last few months of the year, Goldman looks set to generate a remuneration pool amounting to an average of more than $700,000 per staff member – a payout that would risk a backlash in political and public circles. Goldman's payroll includes 5,500 people in Britain, most of whom are based at its UK headquarters on Fleet Street.

In a nod to concern over corporate responsibility, Goldman announced that it was putting $200m into a charitable foundation aimed at supporting educational initiatives around the world. The bank's chief financial officer, David Viniar, accepted that Goldman was treading a delicate line as controversy rages over pay in the financial industry.

"We're very aware of what's going on in the world but we have to trade that off with being fair to our people who, we believe, have performed admirably throughout this crisis," said Viniar.

On a conference call with journalists, he expressed a degree of frustration at the focus on how much Goldman's employees stand to earn.

"Yes, I do think it's too big a focus," said Viniar. "I would prefer people to be focused on the success of our business, how well we're doing and how well our people are performing."

But he said Goldman faces vigorous competition in attracting promising talent: "Our competitors are very good, our competitors are paying people very well and they're willing to hire people with guaranteed bonuses."

In a sign of the speed with which prosperity has returned to trading floors, Goldman's revenue from trading and principal investments more than tripled from last year's $1.59bn to $5.99bn. Despite drops in fees from asset management and from advising on mergers or acquisitions, Goldman's overall revenue leapt by 105% to $12.3bn.

The figures confirmed Goldman's edge over many of its weaker competitors – and reinforced a common view that business is better for banks on Wall Street than on the high street. Rival US institution Citigroup, hampered by consumer losses on credit cards and mortgages, produced figures today which revealed a much more modest quarterly profit of $101m, compared to a $2.81bn loss a year ago.

World leaders gathered at last month's G20 summit in Pittsburgh discussed the issue of bankers' compensation and produced guidelines urging firms to tie pay deals to longer term measures of performance, in an attempt to avert a repetition of the excessive leverage and risk-taking that contributed to the credit crunch.

Avalanche of criticism

A spokesman for Goldman pointed out that the bank and its employees are set to contribute £2bn to the public coffers in Britain through corporation tax, personal tax, National Insurance and other levies. But the financial institution has been struggling to stem an avalanche of criticism over its activities.

Opponents, ranging from the right-wing television host Bill O'Reilly to the Nobel Prize-winning economist Paul Krugman, have questioned whether Goldman's ruthless trading and large employee rewards are healthy for the broader US economy. Unions have accused the bank of emerging from the financial crisis "unrepentant and unreformed".

Others point out that the US government effectively backstopped Wall Street banks as "too big to fail" during the financial crisis, giving them an implicit guarantee. Viniar rejected this, saying Goldman had significantly tightened its balance sheet and had more than $170bn of cash to withstand future crises, adopting an "extremely prudent and extremely conservative" management approach.

Viniar dismissed talk of a government backstop behind banks: "We've heard many people say that but we don't operate the company in that way. We operate as an independent financial institution that stands on its own two feet."

Rival JP Morgan Chase kicked off the US bank reporting season yesterday by smashing profit expectations, and indicated that its bankers are in line for huge bonus payments.

JP Morgan's net profits of $0.82 a share in the three months to 30 September were much greater than Wall Street's expectations of $0.49-$0.51.