Richard D. Fairbank
Chairman and Chief Executive Officer at Capital One Financial
Thank you, Andrew, and welcome, everybody. I'll begin on Slide 10 with fourth 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 fourth quarter of 2021. Credit card segment results are largely a function of our domestic card results and trends which are shown on Slide 11. In the fourth quarter, strong year-over-year growth in every top-line metric continued in our domestic card business. Purchase volume for the fourth quarter was up 9% from the fourth quarter of 2021, ending loan balances increased $22.9 billion, or about 21% year-over-year. Ending loans grew 8% from the sequential quarter and revenue was up 19% year-over-year, driven by the growth in purchase volume and loans as well as strong revenue margin. Both the charge-off rate and the delinquency rate continued to normalize and were below pre-pandemic levels. The domestic card charge-off rate for the quarter was 3.2%, up 173 basis points year-over-year. The 30+ delinquency rate at quarter end was 3.43%, 121 basis points above the prior year. On a linked-quarter basis, the charge-off rate was up 102 basis points, and the delinquency rate was up 46 basis points.
Non-interest expense was up 12% from the fourth quarter of 2021, which includes an increase in marketing. Total company marketing expense was about $1.1 billion in the quarter. Our choices in domestic card marketing are the biggest driver of total company marketing. In our domestic card business, we continue to lean into marketing to drive resilient growth. We're keeping a close eye on competitor actions and potential marketplace risks. We're seeing the success of our marketing and strong growth in domestic card new accounts, purchase volume, and loans across our card business, and strong momentum in our decade long focus on heavy spenders at the top of the marketplace continues.
Slide 12 shows fourth quarter results for our consumer banking business. In the fourth quarter, we continued to see the effects of our choice to pull back on auto growth in response to competitive pricing dynamics that have pressured industry margins. Auto originations declined 32% year-over-year and 20% from the linked quarter. Driven by the decline in auto originations, consumer banking loan growth continued to be slower than previous quarters. Fourth quarter ending loans grew 3% compared to the year-ago quarter. On a linked-quarter basis, ending loans were down 2%. Fourth quarter ending deposits in the consumer bank were up 6% year-over-year and up 5% over the sequential quarter. Average deposits were up 4% year-over-year and up 3% from the sequential quarter. Our digital-first national direct banking strategy continues to get good traction.
Consumer banking revenue was up 10% year-over-year as growth in auto loans and deposits was partially offset by the year-over-year decline in auto margins. Non-interest expense was up 13% compared to the fourth quarter of 2021, driven by investments in the digital capabilities of our auto and retail banking businesses and marketing for our national digital bank.
The auto charge-off rate and delinquency rate continued to normalize in the fourth quarter. The charge-off rate for the fourth quarter was 1.66%, up 108 basis points year-over-year. The 30+ delinquency rate was 5.62%, up 130 basis points year-over-year. On a linked-quarter basis, the charge-off rate was up 61 basis points and the 30+ delinquency rate was up 77 basis points.
Slide 13 shows fourth quarter results for our commercial banking business. Compared to the linked quarter, fourth quarter ending loan balances were down 1% and average loans were flat. Ending deposits were down 1% from the linked quarter. Average deposits grew 7%. Fourth quarter revenue was down 23% from the linked quarter. The decline was primarily driven by an internal funds transfer pricing impact that was offset by an equivalent increase in the other category and was therefore neutral to the company. Excluding this impact, fourth quarter commercial revenue would have been down about 60% quarter-over-quarter and up 2% year-over-year. Non-interest expense was up 2% from the linked quarter. The commercial banking annualized charge-off rate was 6 basis points. The criticized performing loan rate increased 74 basis points from the linked quarter to 6.71%. And the criticized non-performing loan rate was up 17 basis points from the linked quarter to 0.74%.
In closing, we continued to drive strong growth in card revenue, purchase volume, and loans in the fourth quarter. Loan growth in our consumer banking business was slower compared to previous quarters as we continued to pull back on auto originations. Consumer deposits grew. And in our commercial banking business, ending loans and deposits were roughly flat compared to the linked quarter. Charge-off rates and delinquency rates continued to normalize across our business and were below pre-pandemic levels. Total company operating expense net of adjustments was up 2.4% from the linked quarter. Our annual operating efficiency ratio for full-year 2022 was 44.5% net of adjustments, a 15 basis-points improvement from full-year 2021. And we expect that the full-year 2023 annual operating efficiency ratio net of adjustments will be roughly flat to modestly down compared to 2022.
Pulling way up, we continue to see opportunities for resilient asset growth that can deliver sustained revenue annuities. We continue to closely monitor and assess competitive dynamics and economic uncertainty. Powered by our modern digital technology, we're continuously improving our proprietary underwriting, marketing, and product capabilities. We're focusing on efficiency improvements and we're managing capital prudently. As a result of our investments to transform our technology and to drive resilient growth, we're in a strong position to deliver compelling long-term shareholder value and thrive in a broad range and possible economic scenarios.
And now we'll be happy to answer your questions. Jeff?