This paper aims to highlight and explain essential concepts in modern performance-oriented overall bank management. It will provide an overview of the concepts and models that can be applied in performance measurement at both the overall bank level and the portfolio or securities level, noting that the approaches discussed represent only a possible selection from a very broad repertoire. The focus of the study is on the treatment of risk-adjusted and non-risk-adjusted concepts for performance measurement in banks, while also shedding light on and explaining key input variables that are incorporated into these approaches.

Regarding the category of non-risk-adjusted performance measurement approaches, particular attention will be given to the ROE scheme according to Schierenbeck (2003). This involves breaking down the overall result of the bank into its individual components using various metrics such as the gross profit margin or the gross yield margin. The calculation of the contribution margin as the starting point of the ROE scheme will also be explained in detail. To ensure a sufficient understanding of risk-adjusted performance metrics, commonly used and relevant risk measurement metrics will be described, with a specific focus on the concept of Value at Risk as a central approach to quantifying risk capital. Subsequently, selected risk-adjusted performance indicators will be presented on a securities or portfolio basis. Finally, approaches that enable risk-adjusted performance measurement at the business area or overall bank level will be discussed, with particular emphasis on the concepts of RORAC (Return on Risk Adjusted Capital) and RAROC (Risk Adjusted Return on Capital).