Foreign bank branches reported their most profitable quarter since mid-2009 in the final quarter of 2010, data published by the Australian Prudential Regulation Authority shows.The 35 foreign banks operating under branch banking licences in Australia reported an aggregate profit of A$292 million in the December quarter, up from $56 million in the September quarter.In the 2010 calendar year, foreign branch banks reported a profit of $370 million, a rise of only $10 million from 2009.Operating income for foreign banks fell 16 per cent over 2010, to $4.3 billion.The charge for bad debts more than halved, to $614 million.Total assets of foreign banks increased by four per cent over the quarter, to $313 billion, the first rise after seven quarters of decline.The APRA data put the profit margin for the sector at 8.6 per cent in 2010, up from 7.0 per cent in 2009.Profit margins are improving, though, with the margin at 24.7 per cent in the final quarter of the year.