The worst period is over! CEO of Morgan Stanley says the decline in trading and investment banking business has bottomed out.

According to Zhītōng Finance APP, James Gorman, the CEO of Morgan Stanley (MS.US), stated that the decline in the trading and investment banking business has bottomed out, and the worst period is over.

On Tuesday, Gorman said in an interview, "I am confident that we have hit bottom." He stated that trading will rebound, but it may take until next year to recover.

Morgan Stanley released its second-quarter results earlier, and the results of some businesses did not meet analysts' expectations, including the revenue of the trading and investment banking, which includes consulting on mergers and acquisitions, and underwriting of stocks and bonds.

However, when the senior management expressed a more optimistic view of the second half of the year, the stock price of the New York-based bank rose by 7.2% at one point. The bank also recorded a capital inflow of $90 billion in its wealth management department and announced capital ratios far exceeding regulatory requirements.

In May of this year, the 65-year-old Gorman stated that he plans to hand over the leadership within 12 months. The competition to succeed him has entered the final stage, with three candidates being the bank's co-presidents, Ted Pick and Andy Saperstein, and the head of the investment management department, Dan Simkowitz.

Gorman stated that the board of directors will decide who will take over, and each candidate is highly qualified for his position.

Regarding the stock price reaction, the CEO stated that Morgan Stanley's shareholders may be seizing some hopeful signs in the bank's performance. He listed several factors, including "very high conservative capital levels, significant organic growth within several core businesses, and a very high dividend yield for what we do."

Tuesday's surge in stock price was Morgan Stanley's best performance on earnings day in the past decade, closing up more than 6%. Gorman joked, "I guess I should retire today. Isn't this the moment I should 'drop the mic'?"