Rich Fairbank
Chairman and Chief Executive Officer at Capital One Financial
Thank you, Andrew, and good evening, everyone. I'll begin on slide 10 with second quarter results in our Credit Card business. Year-over-year growth in purchase volume and loans, coupled with strong revenue margin, drove an increase in revenue compared to the second quarter of 2021.
Credit Card segment results are largely a function of our Domestic shown on slide 11. Our Domestic Card business posted another quarter of strong year-over-year growth in every top line metrics. Purchase volume for the second quarter was up 18% year-over-year and up 48% compared to the second quarter of 2019.
Ending loan balances increased $19.7 billion or about 21% year-over-year. Ending loans grew 6% from the sequential quarter, and revenue was up 21% year-over-year, driven by the growth in purchase volume and loans, as well as strong revenue margin.
Strong credit results continued in the quarter. Both the charge-off rate and the delinquency rate continued to gradually normalize, but remain well below pre-pandemic levels. The Domestic Card charge-off rate for the quarter was 2.26%, a 2 basis point improvement year-over-year. The 30-plus delinquency rate at quarter end was 2.35%, 67 basis points above the prior year.
On a linked quarter basis, the charge-off rate was up 14 basis points, roughly in line with normal seasonal patterns. The delinquency rate was up 3 basis points from the linked quarter, which we -- when we typically see modest seasonal improvement.
Non-interest expense was up 28% from the second quarter of 2021, driven by an increase in marketing. Total company marketing expense was about $1 billion in the quarter. Our choices in Domestic Card marketing are the biggest, but not the only driver of total company marketing trends. The primary non-card driver of increased marketing is in our Consumer Banking business, where we're marketing to drive deposit growth and build customer franchise in our digital-first national banking strategy.
In our Domestic Card business, we continue to see opportunities to book accounts and loans that can generate resilient and attractive returns. And we continue to lean into marketing to drive growth and build a franchise across our Domestic Card businesses. We're keeping a close eye on competitor actions and potential marketplace risk.
And as always, we underwrite to a worsening scenario, even as we lean into marketing. We're seeing the success of our marketing and strong growth in purchase volume, new accounts and loans across our Domestic Card business. And we continue to gain traction in our decade-long focus on heavy spenders. In the second quarter, heavy spender marketing includes increased early spend bonuses driven by strong first quarter account growth and spending as well as investments in franchise enhancements like our travel portal and airport lounges.
As a result of our marketing, we posted strong growth in heavy spender accounts and strong engagement and spend behaviors with new and existing customers. We're gaining share and building a long-term franchise with heavy spenders at the top of the market. Pulling up, our heavy spender franchise has a different economic mix than some of our other card businesses. It has significantly higher upfront costs of brand building, marketing and promotions and investments in high-end experiences. However, the long-term economics are compelling. And as our heavy spender franchise has grown significantly in recent years, its impact has quietly and gradually changed several Domestic Card metrics and financial results.
Heavy spender credit losses are low, which lowers overall Domestic Card loss rates, all other things being equal. Naturally high heavy spender payment behaviors are a key driver of our long-term trend of increasing domestic card payment rates, and high payment rates go hand-in-hand with strong credit performance.
Heavy spender attrition is very low, and that's been a factor in our strong Domestic Card loan growth. Heavy spenders have a particularly large impact on increasing purchase volume and have been a major driver of strong Domestic Card purchase volume growth that has generally exceeded loan growth over time. This spend velocity has driven increases in net interchange revenue in absolute terms and as a percentage of total revenue. And these interchange fee revenues -- revenue annuities are strong and sustained over very long-term customer relationships.
Our heavy spender franchise generates financial results that are attractive, less volatile and very resilient. As a result, the heavy spender business requires less capital and delivers strong long-term returns on capital.
Pulling way up, our 10-year quest to build our heavy spender franchise has brought with it significantly increased levels of marketing, but the sustained revenue, credit resilience and capital benefits of this enduring franchise are compelling, and they're growing.
Slide 12 shows second quarter results for our Consumer Banking business. In the second quarter, choices we made in our auto business impacted several Consumer Banking trends. We pulled back on growth in auto in response to competitive pricing dynamics. As you'd expect, many auto lenders have raised pricing as rising interest rates drove higher marginal funding costs, but some others have kept pricing relatively flat. These competitors have gained market share and pressured industry margins. We chose to pull back on auto originations, which declined 20% year-over-year and 12% from the linked quarter.
As we pulled back on originations, the year-over-year growth of ending loans in the Consumer Banking business decelerated to 9% in the second quarter. On a linked quarter basis, ending loans were up 1%.
Second quarter ending deposits in the Consumer Bank were up 2% year-over-year, aided in part by the transfer of a small portfolio of deposits from our commercial bank. Consumer Banking deposits declined 1% from the sequential quarter. Consumer Banking revenue was essentially flat compared to the prior year quarter as growth in auto loans was offset by the effects of our decision to completely eliminate overdraft fees and the year-over-year decline in auto margins.
Auto margin compression was primarily driven by the increase in our marginal funding costs, resulting from rapid interest rate increases and the aggressive competitor pricing that, I just discussed. Noninterest expense was up 15% compared to the second quarter of 2021, driven by the increased marketing for our digital national bank and continuing investments in the digital capabilities of our auto and retail banking businesses.
Second quarter provision for credit losses swung from a net benefit of $306 million in the second quarter of 2021 to a net expense of $281 million. We added to the allowance for credit losses in our auto business in the quarter compared to an allowance release in the year ago quarter. The auto charge-off rate and delinquency rate continue to gradually normalize, but we remain well below pre-pandemic levels.
The charge-off rate for the second quarter was 0.61%, up 73 basis points from the unsustainably low, in fact, negative quarterly charge-off rate a year ago. The 30-plus delinquency rate was 4.47%, up 121 basis points year-over-year. On a linked quarter basis, the charge-off rate was down 5 basis points, and the 30-plus delinquency rate was up 62 basis points.
Slide 13 shows second quarter results for our Commercial Banking business, which delivered strong growth in loans and revenue in the quarter. Second quarter ending loan balances were up 9% from the sequential quarter. Average loans increased 5%. Growth in selected industry specialties drove our growth.
Ending deposits were down 14% from the first quarter and down 10% year-over-year, driven in part by the transfer of a small portfolio of deposits to our retail bank that I mentioned a few moments ago, as well as rate-driven runoff as some customers withdrew deposits in search of higher returns. In the second quarter, deposit balances were also impacted by seasonal outflows.
Second quarter revenue was up 3% from the linked quarter and 26% from the prior year quarter. Non-interest expense was down modestly from the linked quarter and up 16% year-over-year. Provision for credit losses increased $214 million from the first quarter, largely driven by a build in the allowance for credit losses. Commercial Banking credit remained strong in the second quarter.
The Commercial Banking annualized charge-off rate was 14 basis points. The criticized performing loan rate was 5.3%, and the criticized non-performing loan rate was 0.7%. In closing, we continued to drive good growth in card revenue, purchase volume and loans in the second quarter. Consumer Banking loan growth continued, albeit at a slower pace. And our Commercial Banking business posted strong growth in loans and revenue.
Credit results remain across our businesses, with charge-off rates and delinquency rates well below pre-pandemic levels even as credit continues to gradually normalize. And we continued to return capital to our shareholders.
For more than three decades, we have hardwired resilience into every underwriting and growth choice we make in good times and bad. And we've steadfastly focused on building an enduring franchise. Sticking to these core tenets, we've demonstrated resilience through several cycles. We've been in a strong position to seize opportunities as markets evolve and as cycles played out. And we've delivered significant value over the long-term.
And we're living by these same core tenets today. We continue to see opportunities to lean into marketing and resilient asset growth that can deliver sustained revenue annuities long after the normalization trends and cyclical credit pressures play out.
We're confident in the choices we're making. As we continue to closely monitor and assess competitive dynamics and increasing economic uncertainty, our credit results remain strong. We're staying focused on the most resilient businesses and sub-segments. And we're continuing to hone the proprietary underwriting and product structures that have driven our resilience through prior cycles. All of these growth in credit risk management choices are enhanced by our technology transformation.
We're managing costs tightly even as we continue to invest in transforming our technology and digital capabilities that are the engine of future growth and efficiency. While the imperatives and marketplace opportunities and risks impact the timing, we remain focused on delivering operating leverage over the long-term powered by growth and digital productivity gains. And we're managing capital prudently to put ourselves in a strong position to weather a broad range of possible economic scenarios and to emerge in a strong position to capitalize on opportunities that are often generated as cycles play out.
Pulling way up, we believe that our long-standing core tenets and the choices they drive today are putting us in a strong position to continue to deliver resilience and compelling long-term shareholder value as the sweeping digital transformation of banking continues.
And now we'll be happy to answer your questions. Danielle?