Richard D. Fairbank
Chairman And Chief Executive Officer at Capital One Financial
Thanks, Andrew. I'll begin on Slide 10 with our Credit Card business. Strong year-over-year purchase volume growth and strong revenue margin drove an increase in revenue compared to the third quarter of 2020 and provision for credit losses improved significantly. Credit Card segment results are largely a function of our domestic card results and trends, which are shown on Slide 11. As you can see on Slide 11, third quarter Domestic Card revenue grew 14% year-over-year. Purchase volume for the third quarter was up 28% year-over-year and up 27% compared to the third quarter of 2019. And the rebound in loan growth continued with ending loan balances up $3.7 billion or about 4% year-over-year. Ending loans also grew 4% from the sequential quarter ahead of typical seasonal growth of around 1%. Ending loan growth was the result of strong growth in purchase volume as well as the traction we're getting with new account originations and line increases, partially offset by continued high payment rates. Payment rates leveled off in the third quarter, but remain near historic highs.
The flip side of high payment rates is strong credit and credit results remain strikingly strong. The Domestic Card charge-off rate for the quarter was 1.36%, a 228 basis point improvement year-over-year. The 30-plus delinquency rate at quarter end was 1.93%, a 28 basis points improvement over the prior year. The pace of year-over-year improvement is slowing, particularly for the delinquency rate. Domestic Card revenue margin was up 218 basis points year-over-year to 18.4%. Two factors drove most of the increase. Revenue margin benefited from spend velocity, which is purchase volume growth and net interchange outpacing loan growth and favorable current credit performance enabled us to recognize a higher proportion of finance charges and fees in third quarter revenue as well. This credit-driven revenue impact generally tracks Domestic Card credit trends. Total company marketing expense was $751 million in the quarter, including marketing in card, auto and retail banking. Our choices in card marketing are the biggest driver of total company marketing trends. We continue to see attractive opportunities to grow our Domestic Card business.
Our loan -- well, our growth opportunities are enhanced by our technology transformation. Turning opportunities into actual growth requires investment. And once again, we're leaning further into marketing to drive growth and to build our franchise. At the same time, we're keeping a watchful eye on the competitive environment, which is intensifying. Looking ahead, we expect a sequential increase in total company marketing in the fourth quarter that's consistent with typical historical pattern. Pulling up, our Domestic Card business continues to deliver significant value as we invest to build our franchise. Slide 12 summarizes third quarter results for our Consumer Banking business. Consistent auto growth and strong auto credit are the main themes in the third quarter Consumer Banking results. Our digital capabilities and deep dealer relationship strategy continue to drive strong growth in our auto business. Driven by auto, third quarter ending loans increased 12% year-over-year in the Consumer Banking business. Average loans also grew 12%. Auto originations were up 29% year-over-year. On a linked quarter basis, auto originations were down 11% from the exceptionally high level in the second quarter.
As we discussed last quarter, pent-up demand and high auto prices had driven a second quarter surge in originations across the auto marketplace. Third quarter ending deposits in the consumer bank were up $2.7 billion or 1% year-over-year. Average deposits were also up 1% year-over-year. Consumer Banking revenue increased 14% from the prior year quarter, driven by growth in auto loans. Third quarter provision for credit losses improved by $48 million year-over-year, driven by an allowance release in our auto business. Credit results in our auto business remained strong. Year-over-year, the third quarter charge-off rate improved five basis points to 0.18% and the delinquency rate improved 11 basis points to 3.65%. Looking at sequential quarter trends, the charge-off rate increase from the unprecedented negative charge-off rate in the second quarter and the 30-plus delinquency rate was up 39 basis points from the second quarter, consistent with historical seasonal pattern. Moving to Slide 13, I'll discuss our Commercial Banking business.
Third quarter ending loan balances were up 4% year-over-year, driven by growth in selected industry specialties. Average loans were down 2%. Ending deposits grew 18% from the third quarter of 2020, as middle market and government customers continue to hold elevated levels of liquidity. Quarterly average deposits also increased 18% year-over-year. Third quarter revenue was up 17% from the prior year quarter and 23% from the linked quarter. Recall that revenue in the second quarter was unusually low due to the impact of moving $1.5 billion of commercial real estate loans to held for sale. Commercial credit performance remained strong. In the third quarter, the commercial banking annualized charge-off rate was five basis points. The criticized performing loan rate was 6.9% and the criticized nonperforming loan rate was 0.8%. Our Commercial Banking business is delivering solid performance as we continue to build our commercial capabilities. I'll close tonight with some thoughts on our results and our strategic positioning. In the third quarter, we drove strong growth in Domestic Card revenue, purchase volume and new accounts. And loan growth is picking up. Credit remains strikingly strong across our businesses, and we continue to return capital to our shareholders. In the marketplace, the pandemic has clearly accelerated digital adoption.
The game is changing from new and permanent shifts in virtual and hybrid work to more digital product and exceptional customer experiences to new fintech innovation and business model. The common thread throughout all of this is technology and the stakes are rising faster than ever before. Competitors are embracing the realization that technology capabilities may be an existential issue. The investment flowing into fintech is breathtaking and it's growing. We can see investors voting with their feet in stunning fintech valuation. And the war for tech talent continues to escalate, which will drive up tech labor costs even before any headcount increases. All these developments underscore the size of the opportunity for players who lead the way in transforming how banking works. And Capital One is very well positioned to do just that. We are in the ninth year of our technology transformation from the bottom of the tech stack up. We were in original fintech, and we have built modern technology capabilities at scale.
But what is also clear in the marketplace is that the time frames for investment and innovation are compressing. The imperative to invest is now. We have been on a long journey to drive down operating efficiency ratio powered by revenue growth and digital productivity gains. Our journey will need to incorporate the investment imperative of the rapidly changing marketplace, and it is likely to pressure operating efficiency ratio along the way. Pulling way up, we're living through an extraordinary time of accelerating digital change. Our modern technology stack is powering our performance and our opportunity. It's setting us up to capitalize on the accelerating digital revolution in banking and it's the engine that drives enduring value creation over the long term.
And now we'll be happy to answer your questions. Jeff?