NEW YORK: James Gorman says the worst is over for the industry’s downturn in trading and investment banking.

       “I do believe it’s bottomed,” the Morgan Stanley chief executive officer (CEO) said in an interview on Bloomberg Television. “Deals will pick up, but possibly not until next year.”

       Morgan Stanley earlier reported second quarter results that fell short of analysts’ estimates for total trading revenue. The firm surpassed expectations for investment banking revenue.

       Still, shares of the New York-based firm surged as much as 7.2% after company executives said they are more optimistic about the second half of the year.

       The firm also recorded US$90bil (RM408.82bil) of inflows at its wealth unit and posted a capital ratio well in excess of regulatory requirements.

       Gorman, 65, said in May that he planned to hand the reins to a successor within 12 months.

       The race to replace him has come down to three finalists: Ted Pick and Andy Saperstein, the firm’s co-presidents, as well as investment management chief Dan Simkowitz.

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       The board will make the decision, and each of the candidates is highly qualified to take over, according to Gorman.

       In commenting on the stock price reaction, the CEO said Morgan Stanley shareholders are perhaps latching on to a number of promising signs in the bank’s results.

       He cited a combination of “really high conservative capital levels, obvious organic growth within a couple of core businesses and a very high dividend yield for what we do.”

       The stock surge on Tuesday ranks among the best earnings day moves for the bank in the past decade.

       “I think I should retire today,” the Morgan Stanley chief executive joked. “Isn’t this the moment where you drop the mic?” — Bloomberg